Retail Capitulation

Retail capitulation refers to the point in a market cycle where individual, non-professional investors sell their assets in a panic. This is often the final stage of a bear market, as retail traders lose confidence and exit to avoid further losses.

Their selling often provides the liquidity that institutional investors use to accumulate positions at lower prices. This behavioral pattern is a classic example of market psychology, where retail sentiment hits an extreme low.

Tracking retail flows can be a useful contrarian indicator for professional traders looking for a market bottom.