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.