The circuit breaker mechanism refers to a series of price fluctuation limits based on reference prices. Simply put, when the stock market falls to a certain level, the market will automatically stop trading for a period of time, which may be a few minutes or entire day. The main purpose of this is to prevent further spread of panic and have a greater impact on the market. The circuit breaker mechanism, also known as the automatic stopping mechanism, refers to the suspension of trading measures taken by the exchange to control risks when the stock index fluctuation reaches the prescribed circuit breaker point. In layman's terms, it is similar to when a short circuit occurs in a circuit, the circuit breaker will immediately disconnect the circuit to protect the electrical appliances from damage.

The circuit breaker mechanism can be divided into three levels during US trading.

(1) The primary market circuit breaker refers to the market falling by 7%

(2) The secondary market circuit breaker refers to the market falling by 13%

( 3) Tertiary market circuit breaker refers to a market drop of 20%

During US trading periods and non-US trading periods, and even some stocks, the US has a fuse mechanism. With the exception of non-U.S. traded futures, which have a fuse against upside, U.S. trading periods only have a fuse against downside. In addition to the market fuse mechanism, the U.S. stock market also includes S&P 500 and Russell 1000 stocks, and ETP stocks are also trading.

The fuse mechanism has many advantages. On the one hand, the fuse mechanism is conducive to stabilizing market sentiment and preventing investors from overreacting; on the other hand, compared with the restrictions on individual stocks, the overall fluctuation limit of the securities market balances the strength of small retail investors and big bankers.

Trading circuit breaker conditions:

1. If the stock price rises or falls by 10% within 5 minutes;

2. Except for the above-mentioned other stocks above US$1, 5 If the price rises or falls by 30% within 5 minutes;

3. Except for the other stocks below 1 US dollar mentioned above, if the price rises or falls by 50% within 5 minutes.

Whether the stock price exceeds $1 depends on the previous day's closing price.