what is limit down 
limit down is a decline in the price of a futures contract or a stock large enough to trigger trading restrictions under exchange rules limits on the speed of market price movements up or down aim to dampen unusual volatility and to give traders time to react to market moving news if any trading curbs triggered by extreme price movements are sometimes called circuit breakers limit down measures the decline from a reference price usually but not always the prior session s closing price the limit down is typically expressed as a percentage of the reference price but occasionally in absolute terms as a dollar value 1understanding limit downtrading curbs including limit down halts are designed to limit self reinforcing plunges and surges in market prices based on the behavior of other market participants and in response to late breaking information once the limit down price is reached trading restrictions kick in these can range from a trading halt as short as five minutes to one that lasts for the remainder of the day some rules permit trading to continue with limit down as the minimum price 2limit down in futures marketsthe london metal exchange adopted a limit down rule restricting trading to a pre set percentage decline from the prior closing price in march 2022 in response to volatile trading in nickel futures 3cme group energy futures impose a two minute trading pause when markets move up or down more than 10 in an hour 2for lumber and agricultural products cme group sets the limit down as a change in dollar terms from the settlement price in the prior session the limits are reset twice a year based on a percentage of the average price over a preceding 45 day period 4stock market circuit breakersu s stock markets are subject to trading restrictions triggered by severe daily declines in the s p 500 index as follows 5u s stock markets were halted for 15 minutes after a 7 intraday drop in the s p 500 index on four occasions during the sell off sparked by the covid 19 pandemic in march 2020 6limit down for individual stocksthe so called limit up limit down rule in effect since 2012 requires trading starts lasting 5 to 10 minutes for stocks experiencing excessive volatility for stocks included in the s p 500 or the russell 1000 indexes and certain exchange traded products the trading pause starts once the price moves up or down at least 5 from the average price in the preceding five minute period for securities priced above 3 for other stocks priced above 3 a move of 10 from the same reference price is grounds for a five minute halt 7the limit up limit down rule and the s p 500 circuit breakers were adopted after the 2010 flash crash which saw the s p 500 drop nearly 9 at the intraday lows of may 6 2010 8