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29. Don't try to catch a falling knife

What Is a Falling Knife?
Falling knife is a colloquial term for a rapid drop in the price or value of a security. The term is commonly used in phrases like, "Don't try to catch a falling knife." It can be translated to mean, "Wait for the price to bottom out before buying it."

A falling knife can quickly rebound in what's known as a whipsaw or the security may lose all its value as in the case of bankruptcy.

Key Takeaways:

The term falling knife refers to a sharp drop.
There's no specific magnitude or duration to the drop before it's considered to be a falling knife.
A falling knife is generally used as a caution not to jump into a stock or other asset during a drop.
Traders will trade on a sharp drop but they generally want to be in a short position and will use technical indicators to time their trades.

https://www.investopedia.com/terms/f/fallingknife.asp