More Happy News…DJIA is way down

At 9:37 EST, the Dow Jones opened DOWN over 350 points this morning. Watch the market today if you have money tied up.

Did you know…

about stock market circuit breakers? I didn’t.

I have yet to find an exact current definition, but I can give you a general one.

A circuit breaker is if the stock market plunges X amount of points in a certain amount of time, then trading is stopped for a pre-specified amount of time.

For example, if the market dropped 1700 points in a few hours, trading would be stopped for say an hour or two, depending on the exact rule.

The more it drops, the longer trading is suspended.

I did not know that.

The Dow Jones closed down 276 points today. Coulda been worse.

The year just started.

Advertisements

One thought on “More Happy News…DJIA is way down

  1. Fascinating. Although i have heard about the circuit breaker a while back it was listed as Trading Curb, so i looked it up and it was far more involved than i thought. This was under Wiki

    Circuit breakers

    “On the New York Stock Exchange (NYSE), one type of trading curb is referred to as a “circuit breaker.” These limits were put in place after Black Monday in order to reduce market volatility and massive panic sell-offs, giving traders time to reconsider their transactions.

    At the start of each quarter, the NYSE sets three circuit breaker levels at levels of 7% (Level 1), 13% (Level 2), and 20% (Level 3) of the average closing price of the S&P 500 for the month preceding the start of the quarter, rounded to the nearest 50-point interval. As of the first quarter of 2014, these levels are 126 points, 234 points, and 360 points respectively.[2] Depending on the point drop that happens and the time of day when it happens, different actions occur automatically: Level 1 and Level 2 declines result in a 15-minute trading halt unless they occur after 3:25pm, when no trading halts apply. A Level 3 decline results in trading being suspended for the remainder of the day.

    Trading curbs on Dow futures contracts traded on the Chicago Board of Trade are based on NYSE levels, with the exception that only the 10% threshold is in effect outside of regular NYSE trading hours, and is relative to the previous daily settlement price.”

    I had always though it was just set at a level designed to stop the trades if a Algorithmic trading binge was detected. Then i found out the market uses it a lot more than i thought. Funny thing about it. It only works on the market downside. Not when the market makes Hugh gains. Wonder who wrote that part into it. Does stop me from looking at my [portfolio for a few days though.

Comments are closed.