An automatic pause in stock trading triggered when the market falls too fast, too quickly.
A circuit breaker is an automatic, temporary halt in stock market trading, triggered when a major index falls a set percentage in a single day, designed to give traders a cooling-off period rather than letting panic selling spiral unchecked. US markets have several tiers, a 7% drop triggers a short pause, deeper drops trigger longer ones or a full closure for the day. They exist largely because of past crashes where trading moved faster than human judgment could keep up with, and they've only been triggered a handful of times in modern market history.
Part of the Open Bell Glossary — plain-English explanations of the terms that come up on the show. Browse every term.