Lock Limit

What this video covers

• The precise definition of a lock limit (locked limit, limit-locked market): price pinned at the daily limit with no counterparty, so zero trades match
• Why the order imbalance causes the lock, not the daily limit itself, and how a contract can trade at the limit forever if both sides remain willing
• Locked limit up: massive buyer wall at the ceiling, no sellers, and the short who needs to buy back to offset is trapped
• Locked limit down: massive seller wall at the floor, no buyers, and the long who needs to sell to offset is trapped
• What being "locked in" means for the trader on the losing side: unable to close the position while losses continue running
• The only two ways relief occurs: the imbalance eases and a counterparty appears, or the exchange expands or removes the limit
• Why meeting a margin call does not unlock the market: it only keeps the account funded, but does not create the counterparty needed to close the position