20 ms·

Correct. 7% decline is a pause. If it drops 13% it will pause for another 15 minutes. If it drops 20% it will end trading for the day.

Waterluvian 7y ago
I'm going to say it. It can't possibly collapse 20% in one day... can it?
- deugtniet 7y ago
  Based on the rules it cannot drop _more_ than 20% in a day :-) There are examples of it happening in other countries though. Zimbabwe and Argentina come to mind for some crazy inflation and stock numbers.
  - JumpCrisscross 7y ago
    > Based on the rules it cannot drop _more_ than 20% in a day Asset pricing is not continuous. A single trade can take pricing from -18% to -X%, with X having any value between infinity and -100. The breaker triggers at -20%. If the market crosses at -18% and then trades -25%, that trade will cross and then trip the breaker.
- MS90 7y ago
  Looks like it's only happened once, 22.61% on Oct 19, 1987. Even the 1929 crash wasn't that much, though it did drop about 24.5% over two days, Oct 28 and 29, 1929. https://en.wikipedia.org/wiki/List_of_largest_daily_changes_in_the_Dow_Jones_Industrial_Average https://en.wikipedia.org/wiki/List_of_largest_daily_changes_...
  - vitaflo 7y ago
    The crash in 1987 is why they put these halting rules in place.
    - jkachmar 7y ago
      I don’t believe this is correct. My understanding is that these automatic limit down rules were added in response to the flash crash in 2010, during which the Dow Jones lost 1000 points over the course of minutes.
    - harambaebae69 7y ago
      This is incorrect, it was somewhere during/after the 2008 recession that these circuit breakers went into effect (because I remember they didn't exist at that time)
    - findjashua 7y ago
      not exactly - circuit breaker was put in place after the 1987 crash, but the 3-tier system (7-13-20) went into effect only in 2013: https://www.wikiwand.com/en/Trading_curb https://www.wikiwand.com/en/Trading_curb
- umanwizard 7y ago
  That's about how much it collapsed on Black Monday in 1987, so, yes, it can.
anm89 7y ago
It's up what, 30 % over the last few months? The real economy didn't grow nearly that much. In terms of real value, the only way for the economy to take that degree of a hit in a day would be a natural disaster. But these numbers are mostly speculation, so yeah they can go up and down very fast minus techinal restrictions like these halts.
- MuffinFlavored 7y ago
  S&P500 has wiped out all growth from 2019 at the moment and is headed lower.
  - anm89 7y ago
    Yes, correct. I should have clarified, before things started crashing, we were up 30% in a few months.
sandov 7y ago
Wouldn't that incentivize people to sell before the pause/end of the trading day, creating a snowball effect?
- azernik 7y ago
  It would indeed, but if it's an irrational panic or an algorithmic mess-up it also allows people to stop and think for a bit. It's a tradeoff, and the main goal is to reduce the extreme failures.

Waterluvian 7y ago

I'm going to say it. It can't possibly collapse 20% in one day... can it?

deugtniet 7y ago
Based on the rules it cannot drop _more_ than 20% in a day :-) There are examples of it happening in other countries though. Zimbabwe and Argentina come to mind for some crazy inflation and stock numbers.
- JumpCrisscross 7y ago
  > Based on the rules it cannot drop _more_ than 20% in a day Asset pricing is not continuous. A single trade can take pricing from -18% to -X%, with X having any value between infinity and -100. The breaker triggers at -20%. If the market crosses at -18% and then trades -25%, that trade will cross and then trip the breaker.
MS90 7y ago
Looks like it's only happened once, 22.61% on Oct 19, 1987. Even the 1929 crash wasn't that much, though it did drop about 24.5% over two days, Oct 28 and 29, 1929. https://en.wikipedia.org/wiki/List_of_largest_daily_changes_in_the_Dow_Jones_Industrial_Average https://en.wikipedia.org/wiki/List_of_largest_daily_changes_...
- vitaflo 7y ago
  The crash in 1987 is why they put these halting rules in place.
  - jkachmar 7y ago
    I don’t believe this is correct. My understanding is that these automatic limit down rules were added in response to the flash crash in 2010, during which the Dow Jones lost 1000 points over the course of minutes.
  - harambaebae69 7y ago
    This is incorrect, it was somewhere during/after the 2008 recession that these circuit breakers went into effect (because I remember they didn't exist at that time)
  - findjashua 7y ago
    not exactly - circuit breaker was put in place after the 1987 crash, but the 3-tier system (7-13-20) went into effect only in 2013: https://www.wikiwand.com/en/Trading_curb https://www.wikiwand.com/en/Trading_curb
umanwizard 7y ago
That's about how much it collapsed on Black Monday in 1987, so, yes, it can.

anm89 7y ago

It's up what, 30 % over the last few months? The real economy didn't grow nearly that much. In terms of real value, the only way for the economy to take that degree of a hit in a day would be a natural disaster. But these numbers are mostly speculation, so yeah they can go up and down very fast minus techinal restrictions like these halts.

MuffinFlavored 7y ago
S&P500 has wiped out all growth from 2019 at the moment and is headed lower.
- anm89 7y ago
  Yes, correct. I should have clarified, before things started crashing, we were up 30% in a few months.

sandov 7y ago

Wouldn't that incentivize people to sell before the pause/end of the trading day, creating a snowball effect?

azernik 7y ago
It would indeed, but if it's an irrational panic or an algorithmic mess-up it also allows people to stop and think for a bit. It's a tradeoff, and the main goal is to reduce the extreme failures.