Circuit Breakers
Chapters in this video
- 0:00 The crisis tools for Fiona versus Trey
- 1:07 Circuit breaker defined: coordinated and market-wide
- 2:22 The three percentage tiers and what each does
- 3:33 Lower tiers pause and resume, top tier closes
- 4:38 Overnight trading: open but capped, not halted
- 5:48 Side-by-side: circuit breaker versus daily price limit
- 6:44 Rapid-fire exam recap
What this video covers
- Why a circuit breaker is a coordinated, market-wide halt across futures and the cash stock market, not an isolated per-contract boundary
- How the three percentage tiers function (roughly 7%, 13%, and 20% declines) and what happens at each: pause then resume for the first two, close the day at the top tier
- The overnight single-limit rule: the market stays open but trades only up to a cap, rather than halting entirely
- Why the trigger is a percentage move in the index, never a fixed dollar distance, and how that contrasts with daily price limits
- The scope distinction: per-contract price limits apply to one product, while circuit breakers span broad equity-index futures and the underlying cash market together
- The exam's favorite trap: confusing a price limit (which can lock a single market) with a circuit breaker (which halts or closes coordinated markets)
Read the full lesson, free
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