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Circuit breaker

A rule that pauses trading after a sharp, rapid drop.

Orders & TradingBeginner

Definition

US markets halt trading market-wide when the S&P 500 falls 7%, 13% or 20% from the prior close; the first two levels pause trading for 15 minutes during most of the day, and the third ends trading for the day. Individual stocks also have limit up-limit down bands that pause a stock when it moves too far, too fast.

Watch out for

Halts are meant to let information catch up, not to stop declines.

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