Price Limit Guide

The maximum amount by which the price of a commodity futures contract may decline in one trading day. Limit down also refers to the maximum decline permitted in individual stocks on certain exchanges before trading curbs kick in. The limit is generally set as a percentage of the market price of the futures or stock, and occasionally as a dollar amount.

These limits were introduced to counter unusual market volatility and prevent panic-driven selling. Some futures markets close trading of contracts when the limit down is reached; others allow trading to resume if the price moves away from the day's limit. If there is a major event affecting the market's sentiment toward a particular commodity, it may take several trading days before the contract price fully reflects this change.

On each trading day, the trading limit may be reached before the market's equilibrium contract price is met. In June , the Securities Exchange Commission approved two proposals put forward by the national securities exchanges and FINRA to counter unprecedented volatility in individual stocks and the U.

One proposal aims to establish a "limit up-limit down" mechanism that will "prevent trades in individual stocks from occurring outside of a specified price band , which will be set at a certain percentage above and below the average price of the security over the immediately preceding five-minute period. These proposals are expected to be implemented by February 4, Dictionary Term Of The Day.

A measure of what it costs an investment company to operate a mutual fund.

InvestorsHub - NYSE, NASDAQ, AMEX, OTCBB, Pink Sheet Stock Message Boards, Stock Charts, Stock Quotes, Level II and Market News

Latest Videos PeerStreet Offers New Way to Bet on Housing New to Buying Bitcoin? This Mistake Could Cost You Guides Stock Basics Economics Basics Options Basics Exam Prep Series 7 Exam CFA Level 1 Series 65 Exam.

Sophisticated content for financial advisors around investment strategies, industry trends, and advisor education. Limit Up Daily Trading Limit Limit Move Variable Price Limit At Limit Lock Limit Position Limit Closing Range Expense Limit.

Live Charts UK - Free live trading charts, stock market prices, historical data, share prices, day trading.

Content Library Articles Terms Videos Guides Slideshows FAQs Calculators Chart Advisor Stock Analysis Stock Simulator FXtrader Exam Prep Quizzer Net Worth Calculator. Work With Investopedia About Us Advertise With Us Write For Us Contact Us Careers.

Get Free Newsletters Newsletters. All Rights Reserved Terms Of Use Privacy Policy.