And what does it change in practice?
Some folks may freak out even if the stock goes down just a few percentages (why they are buying stocks in the first place is another question, though). I guess the very fact of buying trash stocks has already plenty of irrationality in it built in. If you were rational, you would most likely stay away from such stocks altogether (unless you have insider information, of course). People are eager to hope for something out of nothing (just look at ICOs), and when the stocks they have bought in mostly futile hopes of future hefty profits invariably crash, they panic sell them
High risk stocks carry the opportunity for high reward. That's not irrational; it's a question of your appetite for risk. If you're looking to take on a lot of risk in hopes of high gains, that's rational. But I am saying that my definition of panic selling necessitates an element of irrationality of thought. The things you listed, (selling out of a company that was found to be fraudulent, for example) would not be an irrational selling, so it would not be panic selling.
For me, fast selling and panic selling are not synonymous. The differentiatior is whether or not there is a degree of rationality. Selling out of ICOs (or IPOs, or any stock holding for that matter) because the price is dropping (and solely without consideration of anything else) would fit my definition of panic selling. But selling out of an ICO (or anything else) because the price is dropping and you have no expectation that the coin or company serves any market function and the economic prospects are therefore impaired, would not be, because it's based on a rational investment thesis
This seems to be a moot point
But my point is that you can't easily tell the first from the second, while trash stocks (as well as most ICOs, for that matter) generally have more irrationality in them. It is so simply because expecting higher returns for higher risks is not rational itself (unless you are an insider). It is more like gambling, though unlike the latter when you (start to) lose you have a chance of constraining your losses by quickly selling out failing stocks in your portfolio
