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Finance Dictionary and Glossary of Investment Terms
A system in which prices may move only up to a certain amount in either direction in a given session. When the lock-limit is reached, the price is not permitted to move any further in that direction that day. Lock-limits are most commonly used in the futures market.
The lock-limit is the tool the exchanges use to protect investors in a whirlwind market. If a contract price moves up or down to the pre-established price limit, the market ""locks up"" or ""locks down"" and doesn''t open up again until the price returns to an acceptable level. The idea is to prevent prices from swinging too wildly.