Plain-English definitions, reviewed by an independent investor

Market Correction

A correction is a drop of 10%–20% from a recent high — a routine shakeout, milder than a bear.

A correction is a drop of 10%–20% from a recent high — a routine shakeout, milder than a bear.

(Defined by a 10%–20% pullback)

Why it matters

It is the market’s normal exhale after a run.

Common confusion

It can deepen into a bear; the label is only clear in hindsight.

Definitions reviewed by the Investing Glossary editorial team.

Frequently Asked Questions

Correction vs crash?

A crash is a sudden, sharp drop; a correction is a milder 10–20% pullback.

Should I sell?

Many long-term holders do nothing; corrections are common and recover.

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