What is the lock limit?
The lock is a situation associated with the prices of futures contract. If this type of limit occurs, the current trading price for the contract reaches a level equal to the marginal price, which is currently marked by the stock exchange in which the contract is traded. Once the lock limit is identified, the business activity within this stock exchange will exclude any offer that is greater than or less than the limit of the lock associated with this futures contract. Most of the exchanges will use several criteria to determine this type of predetermined price, including financial stability of the underlying entity that issues a contract. The establishment of a marginal price is in fact for the benefit of investors because it helps minimize the amount of loss that investors can cause futures contracts.
The lock limit is usually stored on only one trading day. This means that if on Monday, the business price for the futures contract jumped off just below the limited price of the stock exchange slightly above this price, it would not be allowed to slip back below this marginal price for the rest of the DNe. Similarly, if the commercial price slips below the limit price by the stock exchange, no other orders that were under this limited price would not be made for the rest of the business day. Whether the castle limit would occur would depend on the next trading day on how business prices compared to the limited price associated with this futures contract. In extreme situations, the situation to restrict the chateau may be recognized for the next few days based on what is happening with attempts at trade in this Agreement on each of these days.
The advantage of the lock limit is that it creates a certain level of protection for investors dealing with trading futures contracts. Given the level of risk associated with this type of investment, the potential is to maintain losses significant. By introducing a limit price, the exchange provides investors with another tool that needs to be used in the evaluation of viability or sales of the Futures contract, which is a step that not only helps investors but also helps to maintain tradedIt is brisk and somewhat balanced on the stock exchange.