Trading Curb

What is a 'Trading Curb'

A trading curb is a temporary restriction on program trading in a particular security or market, usually to reduce dramatic price movements. Also known as a collar or circuit breaker.

BREAKING DOWN 'Trading Curb'

When the "curbs are in" at the NYSE, it means that certain types of trading are restricted to prevent volatility. Depending on the situation, this can mean that either all trading is halted or that certain sales can be executed only on an uptick. This kind of rule was implemented after the crash of 1987 (Black Monday), as program trading was thought to be a primary cause of the drop.

RELATED TERMS
  1. Curbs Out

    A term used in investing to signify when trading curbs are no ...
  2. Curbs In

    A term used in investing to signify when trading curbs are active. ...
  3. Circuit Breaker

    Circuit breakers are measures approved by the SEC to curb panic-selling ...
  4. Collar

    1. A protective options strategy that is implemented after a ...
  5. Fast Market Rule

    A rule in the United Kingdom that permits market makers to trade ...
  6. Shock Absorber

    A temporary restriction placed on the trading of index futures ...
Related Articles
  1. Investing News

    Why China Is Suspending Market Circuit Breakers

    Chinese regulators have announced that beginning on January 8th, circuit breakers used to halt its stock markets will be suspended in order to "smooth" trading operations.
  2. Term

    What's a Circuit Breaker?

    A circuit breaker is a measure taken during large stock exchange selloffs to avert panic selling.
  3. Trading Strategies

    Capitalize On Collars To Enhance Your Trades

    Trade collaring measures current technicals and makes swift adjustments to account for environmental changes.
  4. Wealth Management

    Blue Collar Vs. White Collar: Different Social Classes?

    Learn about the implications of the words "blue collar" and "white collar" and the connotation each carries for social class and the type of labor performed.
  5. Options & Futures

    Apple As An Example Of How a Protective Collar Works

    We define a protective collar, using Apple (AAPL) as an example. A protective collar is a combination of a covered call plus long put position.
  6. Forex Education

    5. Protective Collar

    If you want to trade options but are short on strategies, we can help.
  7. Investing Basics

    What is Rule 48?

    Rule 48 is a tool used by market operators to expedite trading in the opening hour, during periods of extreme volatility.
  8. Options & Futures

    Costless Collars: Because Asset Allocation Is Not Enough

    Collars are extremely flexible, and can be much more beneficial to your portfolio than asset allocation.
  9. Options & Futures

    Market Volatility Strategy: Collars

    Find out which protective or bullish collar will result in your optimal risk/return level.
  10. Investing News

    4 Consequences of Government Intervention in China's Markets

    Find out how China's intervention into its stock markets has caused unintended consequences that may be worsen its economic crisis.
RELATED FAQS
  1. What happens when a circuit breaker is put into effect?

    A circuit breaker represents a situation where the Securities and Exchange Commission (SEC) and National Association of Securities ... Read Answer >>
  2. What are restricted shares?

    Understand what a restricted share is. Learn why a company would issue restricted shares to employees and why an employee ... Read Answer >>
  3. What is the downtick-uptick rule on the NYSE?

    To ensure orderly markets, the New York Stock Exchange (NYSE) has a set of restrictions that it can implement when experiencing ... Read Answer >>
  4. What are the best options strategies for investing in the real estate sector?

    Discover two popular options strategies that traders often use to enhance or protect profits when investing in the real estate ... Read Answer >>
  5. What is Black Monday?

    Monday October 19,1987, is known as Black Monday. On that day, stockbrokers in New York, London, Hong Kong, Berlin, Tokyo ... Read Answer >>
  6. Why won't my broker allow me to sell one stock and buy another on the same day?

    There are two likely reasons why a customer would be unable to buy and sell a stock in the same trading day. For simplicity's ... Read Answer >>
Hot Definitions
  1. Return On Invested Capital - ROIC

    A calculation used to assess a company's efficiency at allocating the capital under its control to profitable investments. ...
  2. Law Of Demand

    A microeconomic law that states that, all other factors being equal, as the price of a good or service increases, consumer ...
  3. Cost Of Debt

    The effective rate that a company pays on its current debt. This can be measured in either before- or after-tax returns; ...
  4. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
  5. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  6. Keynesian Economics

    An economic theory of total spending in the economy and its effects on output and inflation. Keynesian economics was developed ...
Trading Center