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What are Market Corrections and Volatilty ?

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Understanding Market Corrections and Volatilty
What is correction?
A stock market correction is a relatively short lived (a few weeks to a few months) and dramatic price decline that interrupts an upward trend in the stock market. A correction is often defined as a drop of between ten and twenty percent from a market high. A drop in excess of twenty percent is typically considered a bear market.
The difference between a bear market and a correction is in its severity and length. It is believed by some that a correction can be a predictor of a coming bear market; it is usually only possible to tell the difference between the two in hindsight. Corrections can help to restore health to an overly stressed stock market by bringing prices and therefore price to earnings ratios down, allowing investors interested in value a buying opportunity
1) No support holds during market falls.
In times of panic and chaos, Dont expect market to behave rationally. Remember, Supports and Resistances work only in normal market conditions, not during broad sell off. Generally, market gives sufficient warning before entering such situation. As a trader one should always try to understand such warnings.
2) Effects of Global Issues and Capital Inflows .
World market share a sentimental bond with each other. Our markets will comply with the ongoing issues in the global scenario. It is important as a trader to keep an eye on the global markets and their trends. Capitals inflows & outflows are largely effected by these issues.
3) Stocks tumble when markets tumble.
when market falls its obvious that all stocks would follow the market and head southward. The stocks which are highly affected are the momentum counters that dont have strong fundamentals. So its better to stay away from such stocks during volatile times and stick to the more stronger stocks such as index stocks. Try to bargain such stocks during market corrections.
4) Cyclic behavior of markets.
Markets tend to follow cyclic behavior. Its necessary for market to correct in order to remove excess fat built during run-ups. It also paves a way of removing weak hands from stock. Corrections are healthy for markets in their long run.
5) Don’t expect immediate recovery.
Its not necessary for markets to recover immediately after a fall. Much of this depend on the healing of the trigger that caused the fall in the first place. Give time for the markets to decide its own direction and go with its trend, rather than judging the market direction by yoursel

A temporary decline in prices during a bull market that partially reverses the previous rally. A correction is often defined as a drop of between ten and twenty percent from a market high. A drop in excess of twenty percent is typically considered a bear market.

The difference between a bear market and a correction is in its severity and length. . Corrections can help to restore health to an overly stressed stock market by bringing prices and therefore price to earnings ratios down, allowing investors interested in value a buying opportunity

1) No support holds during market falls.

Supports and Resistances work only in normal market conditions, not during broad sell off. Generally, market gives sufficient warning before entering such situation. As a trader one should always try to understand such warnings.

2) Effects of Global Issues and Capital Inflows .

World market share a sentimental bond with each other. Our markets will comply with the ongoing issues in the global scenario. It is important as a trader to keep an eye on the global markets and their trends. Capitals inflows & outflows are largely effected by these issues.

3) Stocks tumble when markets tumble.

when market falls its obvious that all stocks would follow the market and head southward. The stocks which are highly affected are the momentum counters that dont have strong fundamentals. So its better to stay away from such stocks during volatile times and stick to the more stronger stocks such as index stocks. Try to bargain such stocks during market corrections.

4) Cyclic behavior of markets.

Markets tend to follow cyclic behavior. Its necessary for market to correct in order to remove excess fat built during run-ups. It also paves a way of removing weak hands from stock. Corrections are healthy for markets in their long run.

5) Don’t expect immediate recovery.

Its not necessary for markets to recover immediately after a fall. Much of this depend on the healing of the trigger that caused the fall in the first place. Give time for the markets to decide its own direction and go with its trend, rather than judging the market direction by yourself