CorrectionBack to Glossary
In trading, a correction refers to a drop of 10% or more in an asset’s price from its most recent highs. Corrections usually follow periods of optimism where buyers are piling into an asset expecting it to rally higher. A correction does not necessarily signal the end of a bull market. Following a correction and period of consolidation an asset can continue to rise, setting higher-highs. Sometimes, however, a correction can break down into an all-out reversal.
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