Capitulation
The point in a decline at which remaining holders abandon their positions, typically on heavy volume.
How it is identified
Test: a sharp price fall on unusually high volume, accompanied by broad negative sentiment and heavy redemptions
Unit
qualitative
In depth
Capitulation is described in market commentary as the moment selling exhausts itself, because those who were determined to hold have finally sold and no marginal seller remains. The description is coherent and the identification is entirely retrospective — every large down day looks like capitulation while it is happening, and most are not. Volume spikes, sentiment extremes and forced selling are the cited markers, none of which is reliable in real time. This dictionary describes the term and makes no suggestion that any decline has ended or will.
Worked example
A session sees volume at four times the twenty-day average and a 7% fall. Commentators describe capitulation; the same description was applied three weeks earlier at a level 14% higher.
Illustrative figures, chosen so the arithmetic is easy to follow. Not a live price and not a valuation of any company.
Educational reference only
This entry explains what “Capitulation” means. It is not investment advice and not a recommendation to buy or sell any security. Any numbers above are illustrative, not live prices, and nothing here predicts price direction or rates a stock. Consider your own circumstances and consult a SEBI-registered investment adviser before acting.