Large-area fuse mechanism refers to a measure taken by the exchange to maintain market stability and investors' interests when the stock market fluctuates violently. As one of the most important stock markets in the world, the American stock market has attracted much attention. This paper will introduce the background, mechanism and influence of the American stock market crash.
1. The background of the US stock market crash
In the past few decades, there have been many violent fluctuations in the US stock market, especially the "Black Monday" of 1987 and the financial crisis in 2008. These events have caused huge market shocks, which have seriously affected investors' confidence and market stability. In order to prevent similar situations from happening again, American exchanges introduced a large-scale fuse mechanism.
2. The melting mechanism of American stock market.
The core of the US stock fuse mechanism is to trigger three different stages of fuse points. When the S & amp； 500 index (S&; P500) will trigger 7%, 13% and 20% fuse points in turn. Each fuse point corresponds to different measures and suspension time.
A. the first S& fuse (7% melting point): when the S & ampP500 drops to 7%, it will be suspended 15 minutes. The purpose of this stage is to give investors a buffer time and avoid excessive panic selling and chain reaction. During the suspension period of 15 minutes, traders can re-evaluate market sentiment and risks and make more informed decisions.
B. Seconds -S& fuse (13% melting point): If S & ampP500 continues to drop to 13%, the suspension will be suspended again 15 minutes. The purpose of this stage is to further slow down market volatility and give traders more time to reflect and adjust their strategies.
C. Third S& fuse (20% melting point): When the S& P500 drops to 20%, trading will be stopped all day. This means that the market has experienced extreme turmoil, and the exchange hopes to avoid further losses and chaos by stopping trading.
3. The impact of the US stock market crash on the market
The implementation of the fuse mechanism in the American stock market has a positive impact on the market. It can slow down market fluctuation and avoid vicious circle and chain reaction. By suspending trading and giving investors time to reflect, the fuse mechanism can alleviate investors' panic and impulsive selling and improve market stability.
The fuse mechanism also provides more protection for investors. If there is no fuse mechanism, the market may plummet in a very short time, resulting in huge losses for investors. By gradually introducing the fuse point, the exchange can give investors more early warning and decision-making time and reduce the possibility of losses.
There is also some controversy about the fuse mechanism. Some critics believe that the fuse mechanism may lead to human intervention and unfair market. They believe that the market should operate and the price should be determined by the relationship between supply and demand, not by the regulations of the exchange. Large-scale fuse mechanism can't solve the fundamental problem of the market, just an emergency measure.
Summary:
The fuse mechanism of American stock market is a measure to maintain market stability and investors' interests. The fuse mechanism can slow down market fluctuation, give investors time to reflect and make decisions, and improve market stability by setting different fuse points and suspending trading in stages. There are also some controversies about the fuse mechanism, including human intervention and unfairness. The most important thing is that the fuse mechanism can't solve the fundamental problem of the market, but is an emergency measure.