The determination of price limit mainly depends on the frequency and amplitude of price fluctuation in the spot market of the commodity. Generally speaking, the more frequent and violent the price fluctuation of a commodity, the greater the daily stop loss of the commodity futures contract; On the contrary, it is smaller.

The daily settlement system is established because the risk can only be controlled within one trading day. If the futures price fluctuates violently during the trading day, it may still cause large-scale losses or even overdrafts in the margin accounts of members and customers, and it will be difficult for futures exchanges to guarantee the performance of contracts and control risks. The implementation of the price limit can effectively slow down and restrain the ups and downs caused by some unexpected events and excessive speculation on futures prices, slow down the price fluctuations in each trading day, and control the losses of exchanges, members and customers within a relatively small range. Moreover, because this system can lock in the maximum profit and loss of the contracts held by members and customers every trading day, it creates favorable conditions for the implementation of the deposit system. This is because as long as the amount of margin charged to members and customers is greater than the amount of possible losses within the fluctuation range, it can be guaranteed that futures prices will not be overdrawn when they fluctuate to the daily limit or the daily limit.