A daily trading limit is a predefined threshold set by exchanges or regulatory bodies that restricts the maximum price movement of a financial instrument within a single trading day. These limits are typically used in markets like equities, futures, and options to mitigate volatility and protect investors from extreme price fluctuations. If the price reaches this limit, trading may be halted or restricted until the next trading session. Daily limits vary by asset class and market conditions, and they are generally established to maintain orderly trading practices and increase market stability.
Market Education