Market Correction

After reading some posts here and listening to some investing podcasts the term “market correction” keeps croping up. Could some one explain exactly what this means please?

I understand that it is related to the share price changing but how is it different from just normal fluctuations in price that we expect to see?

It’s just a term for a larger decrease in price of most or all shares.
People been talking about it for years, just ignore it. Nobody knows anything.


Thank you :slight_smile:

I will ignore it when people mention it.

A correction is a 10% fall, it is a very specific circumstance.

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In the crypto world an example of when the term was used A LOT

Bitcoin jumped from circa 3k to circa 20k in a few months… possibly driven on by the hopes and dreams of the masses thinking their money would just multiply…
At some point some people with lots of bitcoin or lots of people with some bitcoin decided they’d made gains and it was a safe time to sell and take their profits… this triggered a very quick down turn, so the masses followed and continued the selling and bitcoin was back to sub 5k…

So people would say the market corrected itself to a much more fathomable bitcoin price, not supported fully supported by the sheep

Now I have no idea if that’s the correct use for the term but it lines up with Wikipedia … and I’m one of the sheep :wink:

So I think what people are saying right now is that because the market is and has been for a while very bullish (throw some cash at Tesla or Apple and you’d expect it to go up) it mirrors an environment which could experience a correction … but as said before it’s hard to predict these things (well maybe not so much with the last bitcoin fall)

A market correction is a rapid change in the nominal price of a commodity, after a barrier to free trade has been removed and the free market establishes a new equilibrium price. It may also refer to several of these single-commodity corrections en masse, as a collective effect over several markets concurrently.

Some links below that might help:

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