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Trading Curb

Trading Curb Definition

A trading curb, also known as a circuit breaker, is a point at which a stock market will stop trading for a period of time in response to substantial drops in value.


Additional meaning of Trading Curb:

On the New York Stock Exchange (NYSE), one type of trading curb is referred to as a "circuit breaker." These limits were put in place after Black Monday in order to reduce market volatility and massive panic sell-offs, giving traders time to reconsider their transactions.

 At the start of each quarter, the NYSE sets three circuit breaker levels at levels of 10%, 20%, and 30% of the average closing price of the Dow Jones Industrial Average for the month preceding the start of the quarter, rounded to the nearest 50-point interval. As of the second quarter of 2010, these levels are 1,050 points, 2,150 points, and 3,200 points respectively. Depending on the point drop that happens and the time of day when it happens, different actions occur automatically.








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