Daily Trading Limit

Daily Trading Limit
The maximum gain or loss on a derivative contract, such as options and futures contracts, that is allowed in any one trading session. The limits are imposed by the exchanges in order to protect against extreme volatility or manipulation within the markets.

When daily trading limits have been reached, it is said to be a "locked market", and trading will halt for any trades that break the threshold or trading will close for that particular security.

Daily trading limits can also be in place for currency trading, such as China's daily trading limit of 0.5% for the Chinese renminbi against the U.S. dollar. When a particular commodity or contract has reached the daily trading limit, it may be considered "limit up" or "limit down", depending on the direction of the day's move.

Trading limits are much more important for derivatives than for stocks or bonds, for example, because so many investors use massive amounts of leverage to trade commodities, currencies and futures contracts.


Investment dictionary. . 2012.

Игры ⚽ Нужно решить контрольную?

Look at other dictionaries:

  • daily trading limit — The maximum price range set by the exchange cash day for a contract. Chicago Board of Trade glossary …   Financial and business terms

  • daily price limit — The level within many commodity, futures, and options markets are allowed to rise or fall in a day. exchanges usually impose a daily price limit on each contract. Bloomberg Financial Dictionary * * *    The maximum amount, fixed by an exchange,… …   Financial and business terms

  • trading limit — The maximum number of speculative futures contracts one can hold as determined by the Commodity Futures Trading Commission and/or the exchange upon which the contract is traded. Also referred to as position limit. Chicago Board of Trade glossary… …   Financial and business terms

  • Algorithmic trading — In electronic financial markets, algorithmic trading or automated trading, also known as algo trading, black box trading, or robo trading, is the use of computer programs for entering trading orders with the computer algorithm deciding on certain …   Wikipedia

  • price limit — The maximum advance or decline from the previous day s settlement permitted for a contract in one trading session by the rules of the exchange. According to the Chicago Board of Trade rules, an expanded allowable price range set during volatile… …   Financial and business terms

  • Emissions trading — (or emission trading) is an administrative approach used to control pollution by providing economic incentives for achieving reductions in the emissions of pollutants. It is sometimes called cap and trade.A central authority (usually a government …   Wikipedia

  • Personal carbon trading — Part of a series on Green economics Concepts …   Wikipedia

  • Electronic Trading — ▪ 2000 by Irving Pfeffer       The past few years have seen a spectacular and revolutionary development in the mechanics of stock trading perhaps the largest change since brokers fees were deregulated in 1975 electronic trading, or “e trading.”… …   Universalium

  • variable limit — According to the Chicago Board of Trade rules, an expanded allowable price range set during volatile markets. Chicago Board of Trade glossary Most exchanges set limits on the maximum daily price movement of some of the futures contracts traded on …   Financial and business terms

  • Variable Price Limit — A schedule of price variations above or below the accepted limits determined by the commodities exchanges for any one trading day. Variable price limits allow contracts to trade past their maximum daily changes. Exchanges determine whether a… …   Investment dictionary

Share the article and excerpts

Direct link
Do a right-click on the link above
and select “Copy Link”