Price limit

A price limit is an established amount in which a price may increase or decrease in any single trading day[1] from the previous day's settlement price.

In financial and commodity markets, prices are only permitted to rise or fall by a certain number of ticks (or by a certain percentage) per trading session.[1] Similarly, index futures are often permitted to move a certain amount before the cash market opens.[2]

When a price limit is at its highest, it is "limit up" and when at its lowest it is "limit down". Very often, especially in commodities, the price may be "locked" limit either up or down.

References

  1. 1 2 "Daily Price Limits". Retrieved February 24, 2012.
  2. ↑ Stock Index Price Limits (PDF), retrieved January 3, 2012


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