Risk

Correction

A fall of 10% to 20% in a share or the market from its last peak.

Why does it matter?

Corrections happen often in market history, frequently more than once in a decade.

How do I read it?

A fall of more than 20% is called a bear market. Like other labels, "correction" describes what has already happened; it doesn't say what comes next.

Example

If an index peaks at 5,000 points and falls to 4,400, it has dropped 12%: a correction. A fall to 3,900 (22%) would be a bear market.