What is a limit down?

Limit down is a decline in the price of a futures contract or a stock sufficient to trigger trading restrictions. Restrictions can be in the form of trading halts ranging from five minutes to the remainder of the session. They can also allow trading to proceed at prices no lower than the limit down.

What is the difference between limit up and limit down?

By contrast, limits up do the opposite of limits down, placing a limit on how much the price of a commodity or stock can increase. The term limit down refers to the maximum amount that a commodity future or stock price can decrease in a single trading day.

What is limit up-limit down?

Limit Up-Limit Down is a mechanism U.S. securities exchanges use to limit extreme changes in the prices of individual securities. It does this by stopping trades that would take place outside price bands. The bands range above and below a reference price, usually the average trading price during the previous five minutes.