daily trading limit

Daily Trading Limit

The maximum amount of gain or loss that can occur on a particular security or, more commonly, derivative on a trading day. Derivatives, currencies, and commodities can be extremely volatile investments. In order to prevent this volatility from spiraling out of control, options and futures exchanges enact daily trading limits stating that a security cannot rise or fall more than a certain percent in a given trading day. If a security reaches the daily trading limit, trading on that security is suspended for the remainder of the day. This is called a locked market. See also: Limit up, Limit down.

daily trading limit

In commodities, the range of prices within which trades may take place during a day. The limit is usually determined on the basis of the previous day's settlement price.

Daily trading limit.

The daily trading limit is the most that the price of a futures contract can rise or fall in a single session before trading in that contract is stopped for the day.

Trading limits are designed to protect investors from wild price fluctuations and the potential for major losses. They're comparable to the circuit breakers established by stock exchanges to suspend trading when prices fall by a specific percentage.

References in periodicals archive ?
2% lower, with bank shares hitting or nearing the daily trading limit of a 30% loss.
In Shanghai, state-owned China Avic Electronics jumped by its 10 percent daily trading limit to 24.
Besides the lower cap, the mainland stock exchange still imposes a daily trading limit of 10 per cent and a T+1 system that prohibits investors from purchasing and disposing the same shares in the same day in a bid to prevent market volatility.
Previously, the daily trading limit was fixed at 0.
The bank set a daily trading limit for the ETF desk of 100 billion US dollars (pounds 61.
4% to 584 yen on Wednesday, falling by its daily trading limit of 150 yen.
Double Coin, which slumped by the daily trading limit of 10 percent in Shanghai on Monday, said it was concerned about how the dispute could affect the industry s development.
The daily trading limit is 986,669 Shares until October 2, 2008, unless further extended, and 246,667 Shares thereafter, subject to block purchase exceptions.
China announced Friday it will widen the daily trading limit for the yuan against the dollar, effective Monday, and the move triggered purchases of the yen and other Asian currencies in New York trading, traders said.
The dollar rose slightly in Tokyo morning trading on the back of buoyancy in Chinese stocks after the People's Bank of China widened the daily trading limit for the yuan against the dollar.
The yuan closed near its lowest daily trading limit versus the dollar from the central bank's mid-point on Friday after trading mostly at the limit during the session.
Origin Electric ended the day at ask-only of 815 yen after losing its daily trading limit of 100 yen.