DEFINITION of 'Price Ratchet'

A trigger that increases or decreases a price of a share/asset by a certain amount. If you ratchet up the price of a stock, your actions are somehow causing the price of the stock to rise.

BREAKING DOWN 'Price Ratchet'

For example, many events that happen around the world, such as natural disasters or conflicts in the Middle East, can affect the gas prices. When a natural disaster or a new conflict causes an increase in gas prices, it is considered a ratchet.

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