🚨 When a stock hits a circuit breaker, trading pauses to cool sudden price swings! ⏸ It’s a mechanism to curb market panic and restore balance. Learn more
How do Circuit Breakers work in India and how aretraders impacted? At the beginning of the trading session, the maximum and minimum price is
At the beginning of the trading session, the maximum and minimum price is defined for all the securities in the market. This is known as Circuit Limit, and the trading for any security can only happen within this defined price range.
After the financial security hits the Circuit Limit, then some emergency steps are taken by the Stock Exchange. These could be triggered in both cases, when the price moves in either upward or downward direction. These measures are known as Circuit Breakers, and they could even include a temporary suspension in trading of the securities.
So, when a stock hits Circuit Breaker, then some trade restrictions might be placed on the trading of that stock. This helps in preventing a sudden change in the value of the stock, and it also prevents a sudden spread of panic or euphoria in the market. Depending on the situation, it is also possible that the defined limits might be changed.