LIMIT MOVE Meaning and
Definition
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Limit move refers to a term commonly used in financial markets, particularly in the context of futures trading. It signifies the maximum allowable price change in a futures contract on any given trading day. When a particular security or commodity experiences excessive volatility, limit moves are imposed to control and stabilize market movements.
In practical terms, a limit move is a predetermined price threshold beyond which trading is temporarily halted or restricted to prevent extreme price fluctuations. Typically, there are two levels of limit moves for most futures contracts. The first is the initial limit, which represents the maximum price change allowed during the regular trading session. The second level is the expanded limit, which is typically a wider price range implemented after the initial limit has been reached. The expanded limit aims to accommodate larger price swings while still preventing excessive volatility.
Limit moves serve several purposes. Firstly, they provide market participants with a level of assurance by imposing a maximum price deviation, promoting stability, and minimizing sudden price spikes. Secondly, they allow traders to reassess their positions and adjust their strategies during temporary halts in trading. Furthermore, limit moves enable regulators and exchanges to assess market conditions, ensuring fair and orderly trading.
By implementing limit moves, exchanges and regulators aim to maintain market integrity, prevent excessive price volatility, and protect market participants. These measures act as safeguards against extreme price movements, fostering stable and efficient financial markets.
Common Misspellings for LIMIT MOVE
- kimit move
- pimit move
- oimit move
- lumit move
- ljmit move
- lkmit move
- lomit move
- l9mit move
- l8mit move
- linit move
- likit move
- lijit move
- limut move
- limjt move
- limkt move
- limot move
- lim9t move
- lim8t move
- limir move
- limif move
Etymology of LIMIT MOVE
The term "LIMIT MOVE" does not have a specific etymology, as it is a combination of two English words: "limit" and "move". However, we can look at the etymology of each word individually.
1. Limit: The word "limit" originated from the Latin word "limitis", meaning "boundary" or "border". It entered the English language in the 14th century and has remained relatively unchanged in its meaning and usage.
2. Move: The word "move" originated from the Old English word "mōvan", which meant "to move" or "to change position". This word can be traced back to the Proto-Germanic root word "maiwōną". The term "move" has various related meanings, including physical movement, changing residence, making progress, and taking action.
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