When the market swings sharply or reaches daily price limits, staying in a trade can be risky. Here’s what you need to know:
Watch Daily Price Limits
Markets have daily price limits that cap how far prices can move in a single day. If these limits are reached, trading may pause or stop altogether, leaving you unable to exit your position. Always check the daily limits before trading to avoid unexpected halts and potential losses.
Platform Disruptions Can Happen
All trading platforms, regardless of provider, can experience technical issues such as lag, data delays, or outages. These disruptions are more likely during volatile market conditions and can impact your ability to trade effectively. Keep this in mind and avoid trading near price limits to reduce your risk.
Volatile Market Risks
Events like flash crashes, major news releases (e.g., Fed announcements), or sudden price swings can cause erratic market behavior and platform delays. Any losses resulting from these conditions—platform lag, data glitches, or hardware problems—are not covered, and exceeding your account’s risk threshold during these times may lead to disqualification.
Bottom Line:
Avoid trading near daily price limits, especially during high volatility. Stay informed, manage your risk carefully, and be prepared for unexpected market and platform behavior.
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