Myth-busting
The 'buy the dip' myth: buying NIFTY after every red day
Disclaimer: For educational purposes only. These are backtested past results, not investment advice. Trading involves risk, and past performance does not guarantee future returns.
query › "Buy NIFTY at the close of any day it falls more than 1%, exit at the next day's close."
−0.1%
Strategy return
+35%
Buy & hold
44.7%
Win rate
38
Trades
−5.7%
Max drawdown
Growth of ₹1,00,000
"Buy the dip" is the most repeated advice in trading. So we tested the literal version on NIFTY: every time the index closed down more than 1% in a day, buy at that close and exit at the next day's close. Two years, 489 sessions.
Buying the dip did… nothing
38 dips, a 44.7% win rate, and a net return of −0.1%. You'd have taken on the stress of catching falling knives just to end exactly where you started.
The opportunity cost is the real cost
Over the same two years, simply holding NIFTY returned +35%. The dip-buyer's flat line next to buy-and-hold's climb is the whole story — the reflex didn't just fail to add value, it cost you the entire trend.
Takeaway
A one-day 'dip' in an index isn't a signal — it's noise. Timing entries around it added risk and subtracted nothing. In a rising market, time in beats timing the dip.
Want to stress-test your own version — change the entry time, the stop, the trail?
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