Definition. Exchange mechanisms that limit how far price can move within a set time or briefly halt trading during violent moves.
How it works
Outside the regular session, the CME applies limits that cap index futures moves at a set percentage. During the regular session, thresholds tied to the US stock market's trading halt mechanism apply, triggered by S&P 500 declines of 7%, 13% and 20%.
Example
In periods of extreme panic the market can hit the limit, and for a time trading is only possible within it.
What to watch out for
The rules and thresholds can change. The CME publishes current information.
You'll find the full explanation with graphics, examples and exercises in the 🖥️ Order flow atlas space, and its use in the live market in the 🔴 Live Room. Both are available to Club members (in Polish).
