What is the Limit Up-Limit Down Rule?

In simple terms:
This rule pauses trading if a stock’s price moves too far, too quickly. Trading usually resumes after a short pause, but prices can reopen much higher or lower than before.

The detail:
The U.S. Securities and Exchange Commission’s Limit Up–Limit Down Rule (LULD) prevents exchange-listed securities from trading outside of specified price bands. These price bands (“upper” and “lower”) are set at a percentage above and below the average price of the security over the immediately preceding five minutes.

If the price of a security breaches one of these bands, trading in that security will pause for five minutes. Each exchange sets the specific protocols for reopening after such a pause.

TradeZero will continue to accept orders during a halt and route them to the exchange. Execution will then occur on a best-efforts basis once the halt is lifted. Please be aware that when trading resumes, the stock may reopen at a much higher or lower price. If your account is using margin, this could trigger TradeZero’s automatic risk sell-out protocol.