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.

Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.

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.

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References in periodicals archive ?

Stocks also will be free of the 10 per cent daily trading limit that applies on the main Shanghai and Shenzhen exchanges.

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Viden (121800.KQ) and Omnitel (057680.KQ), which are stakeholders of Bithumb, skidded by the daily trading limit of 30 percent each.

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The index closed 16.2% lower, with bank shares hitting or nearing the daily trading limit of a 30% loss.

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The orders came steadily throughout the day and eventually tallied approximately $525 million worth of Apple stock, which significantly exceeded Rochdale's pre-set aggregate daily trading limit of $200 million at Morgan Stanley.

Morgan Stanley Pays $4M to SEC Over Market Access Violations

In Shanghai, state-owned China Avic Electronics jumped by its 10 percent daily trading limit to 24.16 yuan, while Sichuan Chengfei Integration Technology Corp.

Hong Kong stocks end flat

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.

Shanghai Stock Exchange Will Not Extend Trading Hours

Previously, the daily trading limit was fixed at 0.5 percent.

China''s yuan hits record high vs dollar

The bank set a daily trading limit for the ETF desk of 100 billion US dollars (pounds 61.5bn), and also used hedging to reduce risk - for example buying one type of investment and simultaneously selling a similar one to mitigate any loss.

'Trader's gambling cost bank pounds 1.4bn' Actions nearly led to collapse of employer

Olympus' share price plunged 20.4% to 584 yen on Wednesday, falling by its daily trading limit of 150 yen.

Olympus investment losses may have exceeded $1 bln

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.

Chinese tyre makers fret over US trade spat

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.

Dollar trades at lower 121 yen level in early Tokyo deals

The bank set a daily trading limit for the ETF desk of $100bn (pounds 61.5bn), and also used hedging to reduce risk - for example buying one type of investment and simultaneously selling a similar one to mitigate any loss.