Today, the S&P 500 dropped 7% in a single session of trading. What does this mean? It triggers a Level 1 circuit breaker across equity markets and all trading pauses for 15 minutes.
A Level 2 halt happens when a a drop of 13% takes place, but if the drop happens after 3:25 p.m. ET, there is no halt. If the market ever drops 20% in a single day, all trading is halted for the entire day.
Circuit breakers do not happen often and they only apply to certain markets like equities, futures, and more. Knowing the levels for circuit breakers can help you better understand moments when markets are dropping swiftly.
We hope this explanation helps and please press like if you enjoyed it or write in the comments if you want to learn more.