What Is a Market Correction? Is It the Same as a Crash?
Many beginners panic when the market falls 5–10% and media starts using the word “correction.” But what does market correction actually mean? And is it the same as a crash? Let’s understand clearly. What Is a Market Correction? A market correction happens when the stock market falls around 10% from its recent peak. Corrections are: Temporary Normal Healthy in many cases They often occur after markets rise continuously for a long time. Why Do Corrections Happen? Markets correct because: Valuations become expensive Profit booking increases Global uncertainty rises Inflation or interest rate fears increase It is part of the natural market cycle. Is Correction the Same as Crash? No. A crash is usually: Sudden Sharp (20% or more) Driven by panic or major crisis Examples include: Financial crises Pandemic shocks Systemic banking issues Corrections are smaller and more common. Crashes are rare and severe. Why Corrections Are ...