Dip Buying Swing Trading Strategies

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.

Williams %R

Williams %R is a very common technical indicator. It is an oscillator that shows the current price in relation to the previous X number of prices. The usual number of X is 14. In the chart signals on this site the value of X is set to 70 days (i.e. 14 weeks). The buy signal is hit when the value of the Williams %R oscillator goes below -90 (negative 90).

Here's my overview of the Williams %R indicator:

Why Buying When Williams %R < -90 is a Good Strategy

I started trading using 52 week lows, but I always felt that the 52 week low point was not always THE bottom of a stock's cycle of being oversold. I researched a number of other indicators of oversoldness and settled for the weekly Williams %R being below -90. In my extensive backtesting this signal resulted in better potential profits than by just buying the 52 week lows. I now use this indicator as my main entry signal for longer term swing trades of the highest quality stocks and ETFs.

Another advantage is that Williams %R is a widely known about indicator. If you use a technical analysis charting application or website, it's very likely that this oscillator is already built into the technical analysis toolbox.

Why Buying When Williams %R < -90 is a Bad Strategy

It has been my experience that the highest quality stocks (e.g. Coca Cola) do not stay in the oversold region for long.

Like all indicators that show oversoldness, they don't offer much protection against a stock getting even more oversold. A good way to mitigate this is to use the indicator on higher timeframe charts. It is for this reason that I use the indicator on the weekly charts.

Large Gap Down

This is a strategy I stumbled upon by accident. I was watching a YouTube video about an award winning trader. One of his entry strategies was to buy stocks when they gapped UP. I coded this strategy into my backtester and the results were rubbish. It was such a poor strategy when I tried it on my database of value stocks!

Just for fun, I reversed the logic and set my backtester to buy stocks when they gapped DOWN. The results were amazing. It is one of the most profitable strategies I have ever backtested. I am also testing the strategy with real money. So far the results are encouraging, and mirroring the backtests.

Here's my overview of how I use large gaps down in my trading:

Why Buying Large Gaps Down is a Good Strategy

This strategy taps into investor psychology. Stocks usually gap down because there is bad news regarding the stock (e.g. a bad earnings report) or the market itself has a panic (think March 2020 or April 2025). When sellers panic there may be few buyers, so the stock almost always gets oversold to the downside. Eventually buyers will turn up, but they tend to make decisions more slowly than the panic sellers. So what often happens is a stock will go down a lot, and then it will bounce back up.

Large gaps generally occur more in lower quality stocks. If they occur in the highest quality large cap dividend stocks then this often marks an incredible buying opportunity.

Why Buying Large Gaps Down is a Bad Strategy

Gaps down mean something has gone wrong and it's possible a stock will get even more oversold. But it is my experience that higher quality stocks only tend to gap down big at the time of maximum pain.

Be aware that one size fits all is not always appropriate for this strategy. The size of the gap depends on a stock's quality and volatility. After some number crunching in my stocks database I have determined that the optimum size of a gap down for stocks generally is 4%. With the highest quality stocks and ETFs 3% is a good signal. For more precise results on particular instruments experimenting with standard deviations from the average gap size may yield good results. Again, my testing suggests that a minimum gap of 3-4% is a good baseline.

One final warning: quality stocks can often make large gaps down if they're falling out of a bubble. These bubbles are usually due to 'good' stories that investors fall for. For example, the AI bubble, and epic the 2025 bubble in EU defence stocks.

Rate of Change

I stumbled upon this strategy on a YouTube channel called seriousbacktester, then coded it into my backtester. This looks for a period when the stock's price is more than two standard deviations from the mean, followed by a short period when the stock's momentum is positive.

The seriousbacktester YouTube channel is no longer available but I have recorded a video with my own research into this strategy:

Why Buying Rate of Change is a Good Strategy

This taps into investor psychology and attempts to identify the point at which bad news becomes less bad news and buyers start returning to the stock or sector in question.

The indicator also has a good success rate on backtests.

Why Buying Rate of Change is a Bad Strategy

This is a rare indicator and does not occur that frequently, especially in the highest quality stocks and funds.

It is also a fairly complex indicator to scan for stocks and it's far less obvious on stock charts compared to other indicators. The indicator's settings are also fairly dependent upon the individual stock/fund's general volatility.

As with all general oversoldness indicators, a stock can of course go lower and become even more oversold.

Super Oversold (Formerly 20% Drops)

I noticed that while setting stop losses, a drop of 20% from any of the other buy signals listed on this site often coincided with an area of strong support. This made me wonder if buying the stock at this level could be a good swing trading strategy.

This strategy has now been named the Super Oversold strategy. The Super Oversold signals listed on BTFDBot are generated from any of the other signals listed on here that end up with the stock price falling another 20% from the original signal entry price. The site does not currently distinguish between drops from different entry signal types. Some appear more reliable than others so more testing will be performed. 20% drops in price from a 52 week low is looking the most reliably profitable, although most of the drops from the other signals are profitable over a long enough time period.

Why Super Oversold is a Good Strategy

Stocks are severely oversold at this level. In theory they should rebound strongly off of these levels, particularly if there are long term signs of strong support levels at this level. Extensive backtesting has demonstrated that this strategy is a good one. It works extremely well with the higher quality stocks, such as those listed on BTFDBot.

Why Buying Super Oversold is a Bad Strategy

This is the ultimate strategy for those who like to catch falling knives! As with all general oversoldness indicators, a stock can of course go lower and become even more oversold.

I cannot emphasise enough that this strategy is a longer term swing trading strategy and will work much better on higher quality stocks.

Super-Duper Oversold

This is a variant of Super Oversold. For a buy signal to be classified as Super-Duper Oversold the parent signal must have either been a 52 Week Low or a Rate of Change buy signal.

In this video I explain how I enhanced the performance of Super Oversold. Since I made the video I have decided to name this strategy Super-Duper Oversold:

Why Super-Duper Oversold is a Good Strategy

By primarily removing Super Oversold signals generated from 50 Day Lows, the Super Oversold strategy appears to have been significantly juiced.

Why Buying Super-Duper Oversold is a Bad Strategy

This is an extremely rare buy signal, and doesn't often occur.

Backtesting has shown that it doesn't always generate a positive expectancy with all stocks. Generally the most dangerous stock type is anything that has been in a bubble, and the stock price is now falling of of that bubble. Stocks falling out of bubbles are usually those that had good stories, and the story has now changed its narrative. Recent examples of stories:

• Green energy: During my backtesting of UK stocks, most of the large failures of Super Oversold are due to the backtester buying stocks exposed to green energies.
• Weight loss pills: This story caused a huge bubble in some healthcare stocks, most notably Novo Nordisk. For a while money apparently flooded out of snack manufacturers and into the drug companies making these wonder pills.
• EU Defence stocks: Global defence stocks in general rallied hard in 2024-25. At the time of writing this story was still being bought by many investors. In the UK the share price of Rolls-Royce looks like it may have peaked, and yet another story-driven bubble will collapse.
• AI: This story is still very much alive, but we haven't yet reached the new paradigm.

Mega Dump

This is based on seriousbacktester's original Rate of Change strategy, and pre-dates the Rate of Change strategy built into BTFDBot.

This strategy is a cruder version of Rate of Change. It looks for a stock that has fallen 20% in a single day, followed by a short recovery period in which the rate of change turns positive. It differs from Super Oversold and Super-Duper Oversold in that the 20% fall MUST have occurred in a single trading session. Super Oversold and Super-Duper Oversold look for a 20% fall but it can occur over many trading sessions.

To avoid confusion with the existing Rate of Change strategy, I have called this one Mega Dump.

Why Buying Mega Dump is a Good Strategy

20% is a huge fall for higher quality stocks, and is almost always overdone, at least in the short term. The data agrees with me. This strategy has a 94% win rate in all of the signal data available in the larger BTFDBot stocks database [the database attached to this website only has a smaller subset of the data].

The indicator also has comparatively smaller average drawdowns compared with the other strategies.

Why Buying Mega Dump is a Bad Strategy

This is a rare indicator and does not occur at all frequently, especially with the highest quality stocks and funds.

Designating 20% as the value of the large fall is a fairly crude measure of a stock being extremely oversold. While small caps routinely fall over 20% in one day, some stocks may never fall this much. This is why the revised Rate of Change indicator was created: it takes an individual stock's volatility into account.

As with all general oversoldness indicators, a stock can of course go lower and become even more oversold. Most of the failed trades I have seen are associated with stocks coming out of obvious bubbles, or those that are sliding down in a multi-year downtrend.

10 Month SMA Double Cross

This strategy is based on the video below I found on the Scott Welsh Strategies YouTube channel.

Note that Scott calls it The Incredible System. On BTFDBot have renamed it to the 10 Month SMA Double Cross strategy. The major difference between the original strategy is that I have changed it from the 12 month to the 10 month Simple Moving Average (SMA).

There are a few variations of this strategy floating around online. I tried using a variant back in 2023. However the trades I placed at the time turned out to be not very successful. Scott's strategy has what I believe is a much better entry strategy.

So what is the strategy? We look for two monthly candles where the closing price is ABOVE the 10 month SMA on the MONTHLY chart. Both candles will usually (but not always) be green. Once the month is complete, we buy the open on the next trading day. Then we hoddle the stock. We sell when we get a monthly candle that closes BELOW the 10 month SMA. This will almost certainly be a red candle. And that's it. That's literally all there is to this strategy.

Why Buying the 10 Month SMA Double Cross is a Good Strategy

This is a very simple strategy to use and takes very little time to manage. In fact we're only trading on the first trading day of each month.

The indicator also has significantly smaller average drawdowns compared with the other strategies. For example when I backtested it on Allianz Technology Trust, the largest drawdown between 2015 and 2025 was just 8%. It entirely avoided the 42% drawdown during 2022's brutal bear market.

The indicator is spectacularly good at spotting bubbles and will generally allow us to ride the bubble all the way to the peak. Then it will almost always warn us when the bubble has burst.

Incidentally there are variants of this strategy floating around. Some traders like to use the weekly chart as confirmation of entering on the monthly chart. Another strategy I used was to buy on the first green candle where the price closes above the monthly moving average. This gave poor results for me. It's likely I didn't test it on enough stocks though.

Why Buying the 10 Month SMA Double Cross is a Bad Strategy

It can be a little tricky to scan for the set up. I do now list stocks making the entry pattern on BTFDBot, but this site only covers a small number of quality value stocks.

This strategy is not for the impatient or those who like to check the value of their holdings ten times a day!

While Scott called it The Incredible Strategy, my backtesting has revealed that it does NOT have an incredible success rate with all stocks. Check out BTFDBot's monthly strategy backtester here for the results.

However, I found it had a more patchy record with ETFs (80% success rate). With the value stocks in my longer duration backtesting database the success rate is generally around 75%. At the time of writing the success rate for BTFDBot's entire database of 380 stocks and ETFs is 72%. Most stock data is from 2015 - 2025 and ETF data is from 2021 - 2025. While the losers tended to be among the lower quality stocks, the strategy resulted in overall losses in both Coca-Cola and Colgate-Palmolive. Make of that what you will.

It performs poorly on some stocks that are generally a swing trader's dream. From 2015 - 2025 it would have lost money on National Grid (a UK listed utility), Aviva and QinetiQ Group. Having said that, the returns when it works can be spectacular. At the time of writing I believe the most profitable stock that is listed on BTFDBot is Applied Materials with a 321.02% return in 10 years. Buy and hold could have returned 1421% but of course back in 2015 you knew that this stock would perform so well. And along the way you would have endured 3 significant gut wrenching drawdown periods, including a greater than 50% drawdown in 2022.

I will continue to test this strategy. My theory is that it works best on early stage bubbles. For example, my backtester found that it would have returned an astounding 1975.78% profit from the 3rd of January 2017 to the 1st of September 2021 on the Rhodium precious metals ETF! It also would have kept us out of the worst of the bubble's subsequent collapse, with only a 21% drawdown in a bubble that ultimately lost over 84% from the peak.