What is a circuit breaker in the stock market?

It is an automatic pause in trading when prices fall too far, too fast. It gives investors time to absorb information instead of selling in panic.

What triggers a circuit breaker in the US?

Market-wide halts are triggered by declines of 7%, 13% and 20% in the S&P 500 from the previous close. Individual stocks also have their own limit-up and limit-down bands.

Do other markets have circuit breakers?

Yes. South Korea, for example, uses a "sidecar" that pauses program selling when the market moves sharply, as it did in October 2026.

Guide · Markets

What Is a Circuit Breaker in Trading?

When markets move too fast, exchanges sometimes stop trading entirely for a few minutes. Here's why that's considered a feature, not a bug.

Sep 12, 2026

A circuit breaker is an automatic, temporary trading halt triggered when a market or an individual stock moves beyond a preset threshold within a short period. Exchanges use them to pause trading, giving participants a moment to process new information rather than reacting purely on momentum.

The logic is that extremely fast moves can feed on themselves: a sharp initial drop triggers stop-losses and margin calls, which cause further forced selling, which pushes the price down further still. A short pause interrupts that feedback loop and gives the market a chance to find a more considered price once trading resumes.

Circuit breakers exist at multiple levels — some apply to an entire market index after a large move, others apply to a single stock after unusually sharp volatility in it specifically. Either way, the trigger is always mechanical and threshold-based, not a judgment call made in the moment.

Extreme volatility of the kind that can trigger a circuit breaker is exactly the environment where practicing on a simulator first is worth it — Trade2Spike lets you see how fast conditions like that can develop with zero real capital at risk.