← Glossary · DipCatcher terms
Traffic light (value-trap check)
Green, yellow or red: whether a drop looks like a normal pullback or like a trap.
The traffic light checks whether a drop is more likely a normal pullback or shows signs of a lasting downtrend. It compares the price path with the share's own history, its sector and the overall market and takes business figures into account.
Green: looks like a normal pullback. Yellow: a few warning signs. Red: several signs that the decline could continue. Up to three reasons are shown each time. In a backtest over almost 3,000 earlier dips, green cases got back to their old high much more often than red ones; the exact figures are on the method page.