What Is Capitulation in Trading?

What is capitulation in the stock market? It is a period of sharp decline when a large number of investors close their positions, fearing further losses. Widespread panic intensifies stock selling, the market falls rapidly, and investor fear reaches a peak.Market capitulation represents the final stage of a prolonged decline. Stockholders lose hope that prices will recover and close their positions, locking in significant losses. As a result, selling pressure peaks and then gradually weakens, po