1. what is the price limit?

the price limit refers to the extent to which the stock exchange regulates the fluctuation of the stock exchange price on the basis of the closing price of the previous trading day in order to curb excessive speculation and prevent excessive ups and downs in the market.

2. what periods did China's price limit system go through?

the price limit originated from the price limit board. In the past, when foreign exchanges auctioned, they used wooden boards to knock on the desktop to indicate that they had closed or stopped trading. When it is applied to the stock market, when the stock price rises to the upper limit or falls to the lower limit, it will not continue to rise or fall. However, trading does not stop on the price limit, and the transaction continues, but the price remains unchanged.

as a price stabilization mechanism, the price limit has been accompanied by the development of China's stock market since its birth. In May, 1992, Shanghai Stock Exchange cancelled the price limit and implemented T trading rules. In November of the following year, Shenzhen Stock Exchange also lifted the price limit and implemented T .

under this system, the stock market is full of speculation and the stock price is like a roller coaster. As a last resort, the Shanghai and Shenzhen Stock Exchanges re-implemented the price limit system in early 1995. In December 1996, China officially established a 1% price limit range, which has continued to this day.

3. What are the special circumstances that are not limited by price increase or decrease?

Generally, under the following circumstances, the stock is not limited by the fluctuation range:

(1) On the first day of listing of new shares (the price shall not be higher than 144% of the issue price and not lower than 64% of the issue price);

(2) the first day of resumption of trading after the share reform is completed;

(3) the day when the additional shares are listed;

(4) If the stocks after share reform fail to meet the expected targets, the day of stock offering will be added;

(5) On the day of resumption of trading of some major assets reorganization stocks;

(6) the day when the delisted shares resume listing.

4. what are the functions of price limit?

The price fluctuation system sets up a daily limit and a daily limit, which strictly controls the risk within a certain range and can prevent excessive market fluctuations. In addition, the price limit provides a cooling-off period, which can temporarily keep the market calm. In this way, investors will have enough time to digest market information, analyze it reasonably and then take correct trading measures, so that the stock price tends to its intrinsic value, which is conducive to the price discovery of securities.

5. what are the disadvantages of price limit?

many researchers believe that the price limit can not reduce the fluctuation, but will cause the fluctuation to spread for a long period after the price stop, that is to say, the fluctuation will increase for at least several trading days after the price stop.

Price fluctuation limits set the range of price fluctuation in advance. Once the fluctuation stops, the transaction is usually inactive or even impossible to close. This is equivalent to the price limit that hinders the price movement, and the securities prices must wait until the next trading day before they can continue to move in the direction of their real prices, thus delaying the price discovery.

6. how should ordinary investors correctly view the price limit system?

generally speaking, from the practice of China stock market for more than 2 years, the advantages of implementing price limit actually outweigh the disadvantages. It effectively reduces market volatility without excessively distorting market prices, and the delay in price discovery is not serious. Price limit significantly reduces rather than aggravates excessive market volatility, which further illustrates the positive role of price limit.