BROWSE

Daily Trading Limit

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.


Further Reading


Daily price limits and stock price behavior: evidence from the Taiwan stock exchange
www.sciencedirect.com [PDF]
… overnight period following limit moves, the larger the degree of price reversals in the subsequent trading period … Near-limit moves involve daily returns that are close to, but within, price limits … Under the overreaction hypothesis, noise traders would overreact to the new information …

Using an artificial financial market for assessing the impact of Tobin-like transaction taxesUsing an artificial financial market for assessing the impact of Tobin-like transaction taxes
www.sciencedirect.com [PDF]
… overnight period following limit moves, the larger the degree of price reversals in the subsequent trading period … Near-limit moves involve daily returns that are close to, but within, price limits … Under the overreaction hypothesis, noise traders would overreact to the new information …

The magnet effect of price limits: evidence from high-frequency data on Taiwan Stock ExchangeThe magnet effect of price limits: evidence from high-frequency data on Taiwan Stock Exchange
www.sciencedirect.com [PDF]
… overnight period following limit moves, the larger the degree of price reversals in the subsequent trading period … Near-limit moves involve daily returns that are close to, but within, price limits … Under the overreaction hypothesis, noise traders would overreact to the new information …

Heterogeneous agent models in economics and financeHeterogeneous agent models in economics and finance
www.sciencedirect.com [PDF]
… overnight period following limit moves, the larger the degree of price reversals in the subsequent trading period … Near-limit moves involve daily returns that are close to, but within, price limits … Under the overreaction hypothesis, noise traders would overreact to the new information …

Overnight news and daily equity trading risk limitsOvernight news and daily equity trading risk limits
academic.oup.com [PDF]
… overnight period following limit moves, the larger the degree of price reversals in the subsequent trading period … Near-limit moves involve daily returns that are close to, but within, price limits … Under the overreaction hypothesis, noise traders would overreact to the new information …

Price limits and stock market volatility in TaiwanPrice limits and stock market volatility in Taiwan
www.sciencedirect.com [PDF]
… overnight period following limit moves, the larger the degree of price reversals in the subsequent trading period … Near-limit moves involve daily returns that are close to, but within, price limits … Under the overreaction hypothesis, noise traders would overreact to the new information …

Korean stock prices under price limits: Variance ratio tests of random walksKorean stock prices under price limits: Variance ratio tests of random walks
www.tandfonline.com [PDF]
… overnight period following limit moves, the larger the degree of price reversals in the subsequent trading period … Near-limit moves involve daily returns that are close to, but within, price limits … Under the overreaction hypothesis, noise traders would overreact to the new information …

Relative performance of trading halts and price limits: Evidence from the Spanish Stock ExchangeRelative performance of trading halts and price limits: Evidence from the Spanish Stock Exchange
www.sciencedirect.com [PDF]
… overnight period following limit moves, the larger the degree of price reversals in the subsequent trading period … Near-limit moves involve daily returns that are close to, but within, price limits … Under the overreaction hypothesis, noise traders would overreact to the new information …

The limiting extremal behaviour of speculative returns: an analysis of intra-daily data from the Frankfurt Stock ExchangeThe limiting extremal behaviour of speculative returns: an analysis of intra-daily data from the Frankfurt Stock Exchange
www.tandfonline.com [PDF]
… overnight period following limit moves, the larger the degree of price reversals in the subsequent trading period … Near-limit moves involve daily returns that are close to, but within, price limits … Under the overreaction hypothesis, noise traders would overreact to the new information …