What is the Limit Up-Limit Down Rule?

The U.S. Securities and Exchange Commission Limit Up-Limit Down Rule (LULD) prohibits trading activity in exchange-listed securities at prices outside specified price bands (“upper band”; “lower band”), which are established at a percentage level above and below the average price of a security over the immediately preceding 5-minute period.

When the level is breached, the stock will halt trading and there will be a five-minute trading pause.

The protocols for handling a trading pause are established by the exchanges.

TradeZero will accept orders and route them as during a trading halt.

These orders will be traded on a best effort basis in the re-opening process once the halt is lifted.

Clients should be aware that the security may resume trading at a significantly higher or lower price and this may cause an account using margin to trigger TradeZero’s automatic risk sell out protocol

Please also see: What are some reasons TradeZero may close out a position?