Limit Down / Limit Up

Price thresholds set by exchanges that halt or restrict trading when a security or futures contract moves too far in one direction during a single session. The Limit Up-Limit Down (LULD) mechanism was adopted by U.S. equity exchanges after the 2010 Flash Crash to prevent erratic trades. In commodity futures, daily limit moves can lock traders into positions they cannot exit, which is why risk managers always account for the possibility of multiple consecutive limit days.