Retracement
Definition
A retracement is a partial move against the trend, usually measured as a percentage of the move before it.
Detailed Explanation
If a stock runs from $50 to $52 and falls back to $51, that's a 50% retracement. Traders use the percentage to compare pullbacks and to plan trades, because depth changes the math: a deeper retracement leaves more room back to the high, so the same stop gives a better reward-to-risk ratio, but the odds of a new high usually drop. Fibonacci levels such as 38.2% and 61.8% are popular markers, but they're measuring tools and not guarantees. The word pullback means nearly the same thing, and traders use the two interchangeably.
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