Circuit Breaker
Exchange mechanisms that pause or bound trading during extreme moves — including the overnight ±7% limits on index futures and the cash market's 7/13/20% halts.
What is Circuit Breaker?
Circuit breakers are the exchange’s speed governors for crashes and melt-ups. For index futures the overnight session is banded at ±7% from the prior settlement reference; the day session inherits the cash market’s three-tier halt ladder. They exist to force pauses into panics — and they change how orders behave at the extremes.
How Circuit Breaker works
When futures hit “limit down” overnight, price can trade at the limit but not through it — sell market orders queue against whatever bids remain at the band. In RTH, an S&P 500 decline of 7% or 13% from the prior close halts everything for 15 minutes; 20% ends the trading day. Individual contracts like CL and GC carry their own dynamic price limits with brief halts on breach.
Worked example
A pandemic-style shock hits on a Sunday evening: ES gaps down and locks limit at −7% within minutes. A trader’s stop at −5% filled on the way; a trader’s stop at −8% cannot exist — the market is pinned at the band until the RTH open, where the cash-market halt ladder takes over.
Circuit Breaker vs related concepts
Side-by-side comparison of Circuit Breaker against the most commonly confused alternatives.
| Concept | Definition | Category |
|---|---|---|
| Circuit Breaker this term | Exchange mechanisms that pause or bound trading during extreme moves — including the overnight ±7% limits on index futures and the cash market's 7/13/20% halts. | Futures Mechanics |
| Price Limit Rule | A rule restricting trading during exchange-imposed price limit halts (limit-up or limit-down moves) — typically required by firm risk policies during extreme volatility events. | Rules & Risk |
| Settlement Price | The official price set by an exchange at the end of each trading day, used to mark all open positions to market and determine daily P&L for futures contracts. | Futures Mechanics |
| News Trading | A trading approach that takes positions around major economic news events — restricted, banned, or fully allowed depending on the prop firm. | Rules & Risk |
Why traders fail Circuit Breaker
Assuming stops work through a locked limit. At the band, there may be no liquidity to fill you — the gap resumes when limits widen. Not knowing the reference price: the ±7% band anchors to the prior settlement reference, so the actual limit prices change daily; know where they sit before major event risk.
Frequently asked questions about Circuit Breaker
What is limit down in futures?
The overnight price floor for index futures — 7% below the reference price. Futures can trade at the limit but not below it until regular hours begin and the cash-market halt system takes over.
What are the stock market circuit breaker levels?
S&P 500 declines of 7% and 13% from the prior close trigger 15-minute market-wide halts; a 20% decline ends trading for the day. Index futures during RTH halt alongside the cash market.