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Used in the context of general equities. Process by which the exercise of stop orders in a declining or advancing market causes further downward or upward pressure on prices, thus triggering more stop orders and more price pressure, and so on.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.
A situation in which a price rises or falls, which triggers stop orders, resulting in increased pressure to buy or sell the security. The increased or decreased demand for the security drives the price up or down even further, and the cycle continues until a price correction occurs. Snowballing should not be confused with a snowball, which is a different concept altogether.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved