Educational only, not financial advice. Market rules and thresholds can change — verify current specifics with the exchanges or your broker.
LULD (Limit Up-Limit Down) pauses trading in a stock for ~5 minutes when its price moves too far, too fast outside a set price band. It’s a single-stock circuit breaker designed to prevent disorderly moves.
How LULD works
Each stock has a price band around a reference price — roughly 5–10% for higher-priced (Tier 1) names and wider for others — recalculated continuously. If price would trade outside the band and doesn’t re-enter within a short window, a 5-minute halt triggers. Trading then reopens via an auction. It stops erroneous prints and flash-crash-style cascades in a single name.
Why it exists
LULD was introduced after the 2010 “flash crash” to prevent individual securities from trading at absurd prices during momentary dislocations. It keeps a single stock’s moves orderly without halting the whole market (that’s the job of the broader circuit breakers).
LULD is a per-stock speed limit: move too far too fast, and the stock takes a 5-minute timeout to re-find fair value.
What it means for a scalper
For ultra-liquid SPY, LULD halts are very rare, but if you trade individual stocks (or on a genuine crash day), they matter: a halt freezes you and the reopen can gap. It’s the single-stock cousin of the limit up/limit down concept and part of the market’s volatility guardrails.
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