Definition - What does Capitulation mean?

The term capitulation is synonymous with surrender or defeat, usually a military defeat. In the forex market, capitulation refers to surrendering any previous gains in a position and closing it to get out. Capitulation usually refers to a situation where many traders close their positions in the same trading session, giving further strength to a prevailing trend.

ForexDictionary explains Capitulation

True capitulation involves extremely high volume and sharp movements, which are indicative of many traders closing positions simultaneously. As the market is battleground of competing traders, capitulation signals a win for either the shorts or the longs in a particular currency pair.

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