What Is Stock Churning?

Stock limit refers to the purpose of reducing speculative behavior in stock market transactions. It is required to set the price range for each stock on each trading day. The limit is called the limit. As far as the Chinese stock market is concerned, the limit of daily fluctuations is 10%. The 10% increase is the daily limit, and it cannot rise on that day.

Stock limit

Stock limit means to reduce

From the perspective of buyers and sellers, when the strength of the buyer is greater than the seller, that is, those who feel that the stock market is worth investing in the future are greater than those who are bearish on the market outlook, demand will exceed supply.

From

The price limit system originated from the early foreign securities markets. It is a trading system in the securities market to prevent the surge and plunge of trading prices and to suppress excessive speculation. The price of each securities on the same day is appropriately restricted. The maximum fluctuation range in a trading day is a few percent above and below the closing price of the previous trading day, after which trading will be stopped.

The current daily limit system of China's securities market was issued on December 13, 1996, and was implemented on December 26, 1996. It aims to protect the interests of investors, maintain market stability, and further promote market standardization. The system stipulates that, except for the first day of listing, the price of stocks (including A and B shares) and fund securities within a trading day shall not exceed the closing price of the previous trading day by more than 10%, exceeding the price limit. The commission is invalid. ^[1]

The main difference between China's daily limit system and foreign systems is that after the stock price has reached the daily limit, it does not completely stop trading. Trading at or within the daily limit price can continue until the market closes on the day. There are many reasons for the daily limit.