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Behavioural Finance
Capitulation
Definition
Mass surrender by longs after a sustained decline, marked by accelerating volume and panic selling. Short sellers often cover into capitulation lows, as the move has likely exhausted.
Related Terms
Panic Selling
Heavy, emotion-driven liquidation of holdings triggered by sharp price declines or bad news. Often associated with capitulation and short-seller profits.
Short Covering
The process of closing out a short position by buying back the shares that were previously sold short. Also called 'covering' or 'closing a short'.
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