circuit breaker
Market halt triggered when stock prices fall too steeply too fast.
A circuit breaker is an automatic pause in stock market trading, activated when major indexes drop by a certain percentage in a short period. The system works like a circuit breaker in your home’s electrical panel—when something goes wrong, it cuts power to prevent damage. Similarly, trading halts temporarily to let markets cool down and prevent panic-driven crashes.
Circuit breakers exist because markets can spiral downward quickly when fear spreads, with computers automatically selling to lock in losses. These pauses give traders and systems time to reassess, news to circulate, and cooler heads to prevail. When you see a circuit breaker mentioned in headlines, it signals the market experienced a significant shock severe enough to trigger built-in safeguards.
Written once as a plain-English reference, not as advice. Nothing here is a recommendation to buy or sell anything.