Negative feedback refers to the case where the output of the system is subsequently fed back into it, minimizing or reducing the effect of subsequent iterations.
Thus, in the markets, negative feedback loops can reduce volatility, for example, through opposite or value investing.
Investors using a negative feedback strategy buy stocks when prices fall and sell when prices rise.
While technically incorrect, many people refer to a negative feedback loop as a self-perpetuating downward spiral in which some initial bad event is exacerbated and exacerbated by behavior resulting from the original event. However, this is an example of a positive feedback loop reinforcing a negative outcome.