price limit

price limit
The maximum advance or decline from the previous day's settlement permitted for a contract in one trading session by the rules of the exchange. According to the Chicago Board of Trade rules, an expanded allowable price range set during volatile markets. Chicago Board of Trade glossary
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The maximum price rise or decline permitted by an exchange in its commodities. The limit varies from commodity to commodity and may change depending on price volatility (variable price limits). Not all exchanges have limits; those that do set their limits relative to the prior day's settlement, for example, the CBOT may set its limit at 10› for corn. On day 2, corn may trade up or down 10› from the previous day's close of $3.00 per bushel; i.e., up to $3.10 or down to $2.90 per bushel. The CENTER ONLINE Futures Glossary
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The maximum daily price fluctuations on a futures contract during any one session, as determined by the Exchange. (Also known as limit). Chicago Mercantile Exchange Glossary
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A limit set by an exchange which restricts the amount by which a product's price may vary in a trading day, in order to prevent prices moving too far or too fast within a trading session. If the limit is breached during the session, trading is suspended for a set period of time, the theory being that this reduces any panic amongst traders and calms the market. At the end of the period, trading resumes. Few UK exchanges impose price limits, as they prevent investors from trading when they wish, and can therefore have potentially serious consequences. Dresdner Kleinwort Wasserstein financial glossary

Financial and business terms. 2012.

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Look at other dictionaries:

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