Correction Definition

Learn the definition of correction and other ETF terminology from the glossary.

Reviewed by: Staff
Edited by: Staff

Learn more about Corrections

In ETFs, a correction denotes a substantial short-term decline in the market, typically exceeding 10% from its recent peak. Corrections are natural phases within market cycles, often triggered by various factors, including economic indicators or geopolitical events. ETFs tracking broad market indices experience value fluctuations during corrections as underlying securities adjust to shifting market sentiment. Investors recognize corrections as potential buying opportunities, leveraging the inherent diversification in ETFs to navigate market volatility. Understanding corrections is integral to devising a well-informed investment strategy and capitalizing on market conditions for long-term portfolio growth.

Related Terms

Diversification, Exchange-Traded Fund (ETF)


ETF Glossary is’s collection of key terms and definitions related to exchange-traded funds. ETFs are investment funds that are traded on stock exchanges, and they can encompass a wide range of asset classes, including stocks, bonds, commodities and more. Given the diverse range of ETFs and the complexity of financial markets, having a clear understanding of ETF-related terminology is instrumental for investors looking to make informed decisions, manage risks effectively and navigate the evolving landscape of ETF investments.