Investing term

What is Circuit breaker?

An automatic trading halt that fires when the broad market falls past a threshold.

A circuit breaker is an automatic, market-wide trading halt that kicks in when a major index falls past set thresholds in a single day. It pauses trading to let panic cool and information spread, preventing a freefall driven purely by stampede. The halts are temporary and tiered — deeper drops trigger longer pauses.

For example

If the S&P 500 falls 7% in a day, US markets halt for 15 minutes — a built-in timeout to stop a crash feeding on itself.

Circuit breaker is taught hands-on in Stage 5 — How Markets Work Globally.

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Related terms

AskThe lowest price a seller is currently willing to accept.BidThe highest price a buyer is currently willing to pay.ExchangeWhere buyers and sellers of the same stock meet to trade.IPOInitial Public Offering — the first time a company sells shares to the public.
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