Dip Buying Trading Strategies That Work
I started BTFDBot.com after 2 years of testing different trading strategies. The overall strategy I have settled on is to buy high quality dividend stocks when they are oversold, then sell them when they bounce. I have tested various different signals that show when a stock is oversold. This page summarises my results with each strategy.
I have listed the strategies in the order I began testing them.
Disclaimer: this information is for entertainment purposes only. There is no guarantee that these strategies will work with any particular stock or ETF.
52 Week Lows
When a stock puts in a 52 week low this means the stock price is the lowest it has ever been in the previous 52 weeks. This is the first trading strategy I tested using a scientific method. That is, I made trades, and logged all of the results into a spreadsheet.
Why Buying 52 Week Lows is a Good Strategy
Stocks making 52 week lows are very easy to find. There are plenty of free scanners out there, and they're also listed on this website.
Another good thing about 52 week lows is that there's no particular hurry to buy a stock. When a stock puts in a 52 week low it doesn't often rocket off the low, except if there's a general market panic like in March 2020 or April 2025.
For dividend stocks, buying them at 52 week lows can be very attractive. Because the stock price is so low, the dividend yield will be higher than it has been for some time (yields increase as the stock price decreases; assuming there's no dividend cut of course).
Does buying stocks at 52 week lows work? My testing suggests that it does. I bought 208 52 week lows in the autumn of 2024. At the time of writing (July 2025) 68.75% of the trades were profitable.
The strategy has also been successfully tested by Luke L. Wiley who wrote about it in The 52 Week Low Formula (Wiley Press, 2014). His strategy was backtested by Morningstar and was shown to outperform the market as a whole.
Why Buying 52 Week Lows is a Bad Strategy
My experience has been that although 52 week lows usually mark A bottom in stocks, they're not always THE bottom. About the only exception to this are the highest quality stocks (and ETFs). These instruments rarely make 52 week lows. When they do it's usually at a time of panic, such as in 2008, or in 2020.
Don't get me wrong, I do like the 52 week low strategy. However I believe there are other strategies that are better at pin pointing a medium term bottom in stocks.
The other drawback with 52 week lows is that sometimes there aren't any to buy, or the stocks making 52 week lows are of lower quality. This happens after a huge panic, where almost all stocks make a new 52 week low. This happened in March 2020. For the following year almost no stocks made fresh 52 week lows. So if it was your only trading strategy then you would not have had many buy signals for an entire year - until March 2021.
50 Day Lows
When a stock puts in a 50 day low this means the stock price is the lowest it has ever been in the previous 50 days.
Why Buying 50 Day Lows is a Good Strategy
If you want to buy the highest quality dividend stocks on pullbacks, 50 day lows can be a really good signal to wait for. Many of the Dividend Kings almost never put in 52 week lows. So you could wait several years or even a decade for a really good chance to buy the stock at an incredibly attractive valuation.
By contrast, 50 day lows occur much more frequently. I've personally bought a lot of super high quality stocks at 50 day lows.
My testing with real money suggest that 50 day lows are more profitable than 52 week lows. However this might just be due to the condition of the market at the time when I added this strategy to my previous strategy of buying 52 week lows. Another factor could have been my preference for buying higher quality companies at 50 day lows, because the same companies so rarely put in 52 week lows.
Why Buying 50 Day Lows is a Bad Strategy
The major drawback I've found with 50 day lows is that it's difficult to scan for these pullbacks. There are many sites that allow you to scan for 52 week lows. By contrast the only free scanner I could find for 50 day lows is FinViz. It's an option on their stock scanner. However, I found it a little buggy. The other problem is that FinViz only covers US stocks. To find UK stocks at 50 day lows I had to create my own scanner. This is probably the same for other markets. Please do let me know if you find a good (and preferably free) 50 day scanner. You can of course find quality stocks at 50 day lows here on BTFD Bot.
Incidentally the exact number of days doesn't matter too much. So the results from buying a stock at a 60 day low will likely be the same as buying at a 50 day low. I would just be wary of shortening the timeframe to say 30 days. The shorter the timeframe the more risk there is in swing trades going bad.
