• Prices falling 10% or more from recent highs
• Market slowing itself down after rising too fast
• A test of belief and confidence
Why Does It Happen?
• Overextension - Prices rise too fast, valuations stretch too much
• Macroeconomic Changes - Interest rates, inflation, policy shifts
• Positioning Issues - Everyone leaning one way causes forced selling
• Uncertainty - Political tension, regulatory confusion
The 5 Stages Of Correction
Denial - Looks like buying opportunity, confidence still high
Hesitation - Weak bounces, confidence starts cracking
Acceleration - Fast selling, fear spreads everywhere
Exhaustion - Selling slows down, stability returns
Recovery or Downturn - Either recovers or goes deeper
Why Does It Feel So Hard?
• Losses hurt more than gains feel good
• Investors start making short-term decisions
• Traders start holding long-term positions
• After weeks of falling, it feels permanent
What Should You Watch?
• Trend Structure - Are key levels holding or breaking?
• Market Breadth - How many assets are falling?
• Volatility - Level of fear in the market
• News Response - How price reacts to bad news
How To Handle It?
• Keep your role clear - investor or trader
• Manage risk - reduce position size, avoid leverage
• Don't invest all capital at once
• Focus on quality assets
• Be patient - wait for selling pressure to fade
Common Mistakes
• Assuming it must bounce back just because it fell
• Waiting for complete safety before acting
• Treating every correction the same way
• Making decisions based on emotion
Main Message
Corrections are uncomfortable by design. They remove excess and force honest risk assessment.
Winners are those who:
• Don't depend on predictions
• Don't think with emotions
• Have preparation and patience
• Think clearly while staying calm
• Stay disciplined and structured
History's lesson: Markets always stabilize eventually. The greatest advantage goes to tho
se who stay disciplined during corrections.
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