Trading Curb

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DEFINITION of 'Trading Curb'

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.

INVESTOPEDIA EXPLAINS '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. Directional Trading

    Trading strategies based on the investor’s assessment of the ...
  2. Collar

    1. A protective options strategy that is implemented after a ...
  3. Panic Buying

    A type of behavior marked by a rapid increase in purchase volume ...
  4. Black Monday

    October 19, 1987, when the Dow Jones Industrial Average (DJIA) ...
  5. Trading Halt

    A temporary suspension in the trading of a particular security ...
  6. Panic Selling

    Wide-scale selling of an investment, causing a sharp decline ...
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