Introduction

Capitulation refers to a periodic sell-off in which investors return their position and sell their shares quickly. In this case, an explosive sale occurs, and the sales amount reaches above average. As the sales trend increases in capitulation, the price of the product also decreases rapidly.

In capitulation, most investors lose hope and sell all their capital at once. In this case, they sell all their stocks so as not to make new losses. When this sales volume ends, there will be a beginning to reinvest and form a bull market.

What happened after Capitulation

The more severe the price and sales decline, the greater a more robust market formation after capitulation. In this case, due to the high level of sales pressure, most investors sell everything they have, and stocks or assets approach their zero line. However, a restart can be considered for these stocks. The term capitulation is mainly used to refer to the surrender of a government or country.

In the capital market, the term uses when investors deliver and sell all their assets. Instead of keeping assets, capitalists decide to sell all their property at the current price in one go to avoid further losses. One of the main signs of capitulation is swift price declines. Although this situation is tough to diagnose, it is possible to determine whether we are facing capitulation by examining the statistical data on an asset. Excessive pressure to sell is the first sign of this.