In this video, you will learn how circuit breakers work in the stock market.
#circuitbreaker #stockmarket #wallstreetmojo #tradinghalt #sec
Chapters:
00:00 – Introduction
00:41 – How does the circuit breaker work in the stock market?
02:35 – Impact of circuit breaker
03:43 – Conclusion
How does the circuit breaker work in the stock market?
Circuit breakers have three levels triggered based on how much the price has declined.
Level 1 – 7% from the closing price of the previous day.
Level 2 – 13% from the closing price of the previous day.
Level 3 – 20% from the closing price of the previous day.
The SEC introduced bands for circuit breakers in stocks based on percentage change concerning the average price in the last 5 minutes.
Band 1 will be triggered if the price falls by 5%.
Band 2 will be triggered if the price falls by 10%.
Band 3 will be triggered if the price falls by 20%.
(Explained in detail in the video)
Impact of circuit breaker?
Circuit breakers protected the market from sliding even further.
When investors see price tanking, they might not think rationally and start selling everything to protect themselves from taking losses.
If it weren’t for the 15-minute trading halt, investors wouldn’t get the time to rethink and avoid panic decision-making.
This was all about circuit breaker in stock market. Don’t forget to subscribe to the channel, like this video, and share it with others.
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