What Is Capitulation As It Relates to Trading?


Since most of the equity markets are at or near all-time highs, I thought that this might be a great time to talk about market capitulation and why you should be aware of this phenomena. It is important to understand that it takes considerable experience to properly identify and trade capitulation which can occur at all-time highs or solid resistance that can’t be broken through. A simple definition of capitulation is when long positions are abandoned and a period of high volume selling occurs as traders experience panic

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