April 20, 2024 Breaking News, Latest News, and Videos

What is a Market Correction? The Basics

Often, it feels like learning how to take advantage of your finances begins with learning a new language. There are so many different terms to discover in this world, from mutual funds, to ETFs, it’s no wonder beginners frequently end up overwhelmed. And there are a few areas where you do not have to sacrifice quality to save money, with the right know how, this can be one of them.

One of the most commonly cited complex parts of the trading environment, is the term market correction. This is something that’s likely to appear pretty frequently in your trading and investment life, so it’s worth getting to grips with it as quickly as possible. Today, we’re going to define this term for you, and help you prepare for when you encounter it yourself. 

Defining the Market Correction

A correction is simply a moderate decline in the value of a market index or individual asset. Usually, corrections are about 10 to 20% of a drop in value from a more recent peak in the cost of the equity you purchase. A correction can happen in a range of different environments, from within the shares of your favorite gaming company, to the S&P 500. Though this term appears quite frequently in the investing and trading space, many investors respond to it as though it means the same thing as a bear market or stock crash. When a correction happens, you may see a number of investors panicking they’re going to lose all of their money because of a sudden drop in value.

However, the truth is stock market corrections happen all the time, and they’re rarely as life altering as some people would think. Rather, you’ll usually find you can withstand these corrections provided you have the right diversification strategy in place. You may even find you can handle market corrections as a day trader. Most of the time, market corrections don’t have much of an impact on day traders, beyond providing them with additional opportunities. This is because corrections actually deliver volatility in the market, characterized by wider price fluctuations and heavier trading. You can learn more about the unique considerations for day traders by reading this market guide on day trading that you can utilize.

Dealing with the Ups and Downs of Trading

There are many different components to trading today’s stock market enthusiasts need to be aware of, corrections are just one of them. Typically, the US market will enter a state of correction when an economic shock or major event in society prompts investors to stop, take a step back, and consider what’s going on in the world at large. The good news for those who feel panicked by the concept, is corrections are usually short-term changes which last for just a few weeks or months. 

Ultimately, there’s no guarantee of how long one of these corrections will last, but the more time you spend in the market, practicing your skills, the more comfortable you’ll feel with the concept overall. It’s very rare for a correction to suddenly turn into a bear market – although it does happen. Fortunately, you should be able to protect against this issue by simply taking the time to practice pinpointing red flags in your chosen market.

in News
Related Posts

Make Science Your Destination This Summer

April 19, 2024

April 19, 2024

Destination Science is the fun science day camp for curious kids with over 15 STEM activities weekly, three science stations...

Prime Time Sports Camps Coming Soon

April 19, 2024

April 19, 2024

Prime Time Sports Camp has remained a constant in the everchanging camp landscape for over 30 years by following this...

Groundlings Summer Improv Classes Open April 2

April 19, 2024

April 19, 2024

A summer of improvisation is around the corner at The Groundlings. Three months of summer class offerings for teens will...

Coming to Venice for 4/20? Visit your original cannabis locals! Specials! Live entertainment @4:20pm  Doors open at 10am!!

April 19, 2024

April 19, 2024

Coming to Venice for 4/20? Visit your original cannabis locals! Specials! Live entertainment @4:20pm Doors open at 10am!! Free goodies!!...

Report: Video Game Mogul Lists Palisades Home for $9.2M

April 19, 2024

April 19, 2024

Built in 2018, the Wood-Shingled Home Spans 7,000 Square Feet across Multiple Levels Dan Houser, the English video game magnate,...

Venice Kush Hosts “The Real Deal” Cannabis Celebration at the Beach

April 19, 2024

April 19, 2024

A Day of Education, Innovation, and Community at Venice Beach Venice Kush is gearing up to host its much-anticipated “The...

Get Jokerfied with The People’s Joker Director Vera Drew Interview; Now Playing at the Nuart Theatre

April 19, 2024

April 19, 2024

Vera Drew on Crafting a Trans Supervillain and Creating Comedy Chaos By Dolores Quintana The People’s Joker is an explosive...

Join Jerry Rubin for the Earth Day Tree Hugging Gathering in Santa Monica

April 19, 2024

April 19, 2024

Celebrate Mother Earth’s Splendor at the Iconic Moreton Bay Fig Tree Tree lovers, environmental enthusiasts, and advocates for Mother Earth...

Nicolas Cage Stars in Arcadian: A Bewitching Apocalypse

April 18, 2024

April 18, 2024

New Horror Film Delivers Solid Monster Movie Experience Arcadian is a new horror film starring Nicolas Cage (Dream Scenario, Mandy),...

SMC to Host Applied Music Showcase in May

April 18, 2024

April 18, 2024

Highlighted Students Set to Perform a Variety of Songs, Instrumental Solos, Ensemble Pieces, and Original Compositions Santa Monica College’s Music...

(Video) Award-Winning Pianist to Premiere “Rocket Man: A Live Orchestral Experience” in Santa Monica

April 18, 2024

April 18, 2024

Classic Songs Will Include “Crocodile Rock” and “Goodbye Yellow Brick Road” @smmirrornews “Rocket Man” is coming soon to Santa Monica...

Agreement Between SMMUSD and Malibu Moves District Separation Efforts Forward

April 17, 2024

April 17, 2024

The Agreement Awaits Approval by Both the Malibu City Council and the Smmusd Board of Education The City of Malibu...

Michael’s Santa Monica Celebrates 45 Years with Culinary Extravaganza With Famous Chefs

April 17, 2024

April 17, 2024

Iconic Restaurant Hosts “Great Party!!” Benefitting No Kid Hungry Campaign  Michael’s Santa Monica is set to commemorate its 45th anniversary...

Los Angeles Times Presents Star-Studded Lineup for 29th Festival of Books This Weekend

April 17, 2024

April 17, 2024

Over 550 Writers and Celebrities to Grace USC Campus for Weekend Extravaganza The Los Angeles Times has a stellar lineup...

Girls Learn Self Defense at Empowerment Summer Camp for Girls

April 17, 2024

April 17, 2024

This summer, girls are invited to explore practical self defense training at SHIELD Women’s Self Defense’s 2024 Empowerment Summer Camp...