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Market panic, or panic selling, is when traders sell an asset or an investment, causing prices to fall sharply. Panic selling is nothing new for the forex markets. In fact, it is so common that many stock exchanges have systems in place to curb the activity.
Market panic selling occurs amid rising investor sentiment on some negative news, impacting their investment. As more and more offers pour in, the price of the asset starts to drop rapidly. As a result, this could lead to a devastating effect, especially if the asset happens to be a stock.
Panic selling can occur in a number of ways, ranging from speculative positions (and short sellers) to economic and geopolitical issues. The impact of this is felt across different asset classes.
Many trading exchanges have now built-in systems that can automatically halt trading operations. This is done in order to give investors some time to digest the news. (It is therefore not surprising...
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