Capitulation
 |
Definition of 'Capitulation'When investors give up any previous gains in stock price by selling equities in an effort to get out of the market and into less risky investments. True capitulation involves extremely high volume and sharp declines. It usually is indicated by panic selling.The term is a derived from a military term which refers to surrender. |
 |
Investopedia explains 'Capitulation'After capitulation selling, it is thought that there are great bargains to be had. The belief is that everyone who wants to get out of a stock, for any reason (including forced selling due to margin calls), has sold. The price should then, theoretically, reverse or bounce off the lows. In other words, some investors believe that true capitulation is the sign of a bottom. |
Related Definitions
Articles Of Interest
-
War's Influence On Wall Street
Blitzkrieg? Dawn raids? Sounds like the markets and the battlefield have a few things in common. -
Connecting Crashes, Corrections And Capitulation
Even though crashes, corrections and capitulations are bad news for investors holding the stock, there are still ways to profit. -
Sympathy Sell-Off: An Investor's Guide
Find out how to tell whether your stock is a bargain or a bank breaker. -
If everyone is selling in a bear market, does your broker have to buy your shares from you? If so, won't he be losing his shirt?
A broker won't lose money when a stock goes down because he or she is usually nothing more than an agent acting on sellers' behalf in finding somebody else who wants to buy the shares. Even though ... -
The Nash Equilibrium
Nash Equilibrium is a key concept of game theory, which helps explain how people and groups approach complex decisions. Named after renowned mathematician John Nash, the idea of Nash Equilibrium ... -
Pitfalls Of Copycat Investing
While it may sound good in theory to attempt to mimic the investment style and profile of a successful institution, it is often much harder (if not impossible) to do so in practice. -
The Art Of Cutting Your Losses
Taking corrective action before your losses worsen is always a good strategy. Find out how to keep your capital losses small and let your winners run. -
Master Your Trading Mindtraps
Traders are only human; therefore, they are subject to psychological traps when they trade. Read how you can manage your emotions so that you can profit from your trading. -
7 Controversial Investing Theories
We take a closer look at the theories that attempt to explain and influence the market. -
The Downward Spiral Of Trading Addiction
Trading in the financial markets is stimulating, exciting and engrossing. But one can become addicted, just like with actual casino gambling or illegal drugs. Like any severe addiction, this ...
Free Annual Reports