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Sell-Off

Trading Term

A sell-off in trading refers to a rapid and widespread decline in the price of securities caused by a large volume of selling. It often occurs when investors, driven by fear, negative news, or market uncertainty, begin to unload positions en masse, pushing prices sharply lower. Sell-offs can affect a single stock, an entire sector, or even global markets depending on the catalyst.

Sell-offs are typically triggered by events such as economic data disappointments, earnings misses, geopolitical tensions, interest rate hikes, or broader shifts in investor sentiment. For example, if inflation data comes in higher than expected, investors may fear tighter monetary policy and start selling off stocks, especially in interest-rate-sensitive sectors like technology or real estate.

From a technical standpoint, a sell-off can break key support levels on price charts, prompting more automated or emotion-driven selling. In extreme cases, sell-offs can lead to market corrections (a drop of 10% or more) or even bear markets (a decline of 20% or more). However, some investors see sell-offs as buying opportunities, especially if they believe the underlying fundamentals remain strong.

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