Fifty Percent Principle

AAA

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.

INVESTOPEDIA EXPLAINS '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.

RELATED TERMS
  1. Moving Average - MA

    A widely used indicator in technical analysis that helps smooth ...
  2. Simple Moving Average - SMA

    A simple, or arithmetic, moving average that is calculated by ...
  3. Fibonacci Retracement

    A term used in technical analysis that refers to areas of support ...
  4. Exponential Moving Average - EMA

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

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

    A method of evaluating securities by analyzing statistics generated ...
Related Articles
  1. Technical Indicators

    What are the best technical indicators to complement the Negative Volume Index (NVI)?

    Explore other technical indicators that can be used when designing a trading strategy that incorporates the negative volume index.
  2. Technical Indicators

    What are the best technical indicators to complement the Moving Average Envelopes?

    Learn how moving average envelopes can be used with a wide variety of different technical indicators and oscillators to spot trading opportunities.
  3. Trading Strategies

    How effective is it to create trade entries after spotting a Hanging Man pattern?

    Explore the factors that influence the effectiveness of a trading strategy based on the hanging man pattern and what makes this pattern more or less reliable.
  4. Technical Indicators

    What is a good gearing ratio?

    Understand the meaning of the gearing ratio, how it is calculated, the definition of high and low gearing, and how they reflect relative financial stability.
  5. Chart Advisor

    Cocoa Prices Setting Up For A Move Lower

    Cocoa prices have been trending lower over the past several months and the recent bearish crossover between the 50-day and 200-day moving averages suggest that the long-term downtrend is gaining ...
  6. Investing Basics

    What is considered to be a bad gearing ratio?

    Understand the basics of gearing, including the net gearing ratio, what constitutes a bad gearing ratio and how this figure reflects financial stability.
  7. Trading Strategies

    What is the difference between a Hanging Man and a Hammer Pattern?

    Understand the difference between the hanging man and hammer candlestick patterns, the components of each and what they indicate about future performance.
  8. Technical Indicators

    How do I build a profitable strategy when spotting a Hanging Man pattern?

    Learn how to use the opportunity for a low-risk, high-reward trade that is presented when a trader identifies the hanging man candlestick pattern.
  9. Technical Indicators

    How are Hanging Man patterns interpreted by analysts and traders?

    Learn the meaning of the hanging man candlestick formation and why it is viewed by market analysts and traders as a possible market reversal signal.
  10. Forex Strategies

    Are divergence trading strategies useful in forex trading?

    Use divergence indicators to identify market tops or bottoms, and find out how trading divergence strategies are used in forex trading.

You May Also Like

Hot Definitions
  1. Multinational Corporation - MNC

    A corporation that has its facilities and other assets in at least one country other than its home country. Such companies ...
  2. SWOT Analysis

    A tool that identifies the strengths, weaknesses, opportunities and threats of an organization. Specifically, SWOT is a basic, ...
  3. Simple Interest

    A quick method of calculating the interest charge on a loan. Simple interest is determined by multiplying the interest rate ...
  4. Special Administrative Region - SAR

    Unique geographical areas with a high degree of autonomy set up by the People's Republic of China. The Special Administrative ...
  5. Annual Percentage Rate - APR

    The annual rate that is charged for borrowing (or made by investing), expressed as a single percentage number that represents ...
  6. Free Carrier - FCA

    A trade term requiring the seller to deliver goods to a named airport, terminal, or other place where the carrier operates. ...
Trading Center