What is ‘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.
Explaining ‘Daily Trading Limit’
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.
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- Using an artificial financial market for assessing the impact of Tobin-like transaction taxes – www.sciencedirect.com [PDF]
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- Heterogeneous agent models in economics and finance – www.sciencedirect.com [PDF]
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