It is the maximum gain or loss on a derivative contract, such as options and futures contracts that is allowed in any one trading session. Derivatives, currencies, and commodities can be extremely volatile investments. In order to prevent this volatility from spiralling out of control, options and futures exchanges enact daily trading limits stating that a security cannot rise or fall more than a certain percent in a given trading day. Trading in an asset is automatically suspended when the daily limit is reached.
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