Fifty Percent Principle


DEFINITION of 'Fifty Percent Principle'

A principle that predicts that, before the observed trend continues forward, a price correction of approximately 1/2 to 2/3 of the change in price will occur.

BREAKING DOWN 'Fifty Percent Principle'

Also known as a "one-half retracement," this correction is considered to be the normal course of uptrends as investors are initially weary and taking some profits.

  1. Moving Average - MA

    A widely used indicator in technical analysis that helps smooth ...
  2. Trend

    The general direction of a market or of the price of an asset. ...
  3. Correction

    A reverse movement, usually negative, of at least 10% in a stock, ...
  4. Technical Analysis

    A method of evaluating securities by analyzing statistics generated ...
  5. Trend Analysis

    An aspect of technical analysis that tries to predict the future ...
  6. Exponential Moving Average - EMA

    A type of moving average that is similar to a simple moving average, ...
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