Why the market has speed limits
Imagine a road with no speed limit — exciting, but dangerous. The share market is similar. To stop prices from crashing or shooting up too violently in a single day, the market uses safety rules. Two you will hear about often are the circuit breaker and the floor price. Both exist to protect ordinary investors from wild, panicky swings. Knowing how they work means you will never be confused when a price suddenly seems stuck.
The circuit breaker — the daily limit
A circuit breaker sets how far a single share's price can move in one day, up or down, from where it closed the day before. On the Dhaka market, a stock generally cannot rise or fall more than about 10% in a single session. So if a share closed at 100 yesterday, it can usually only travel within roughly 90 to 110 today. This stops a single rumour from doubling or destroying a price in an afternoon.
What 'hitting the circuit' means
When a stock reaches its allowed limit for the day, people say it has hit the circuit. If it hits the upper limit, it means buyers are desperate and there are few sellers — the price simply stops climbing for the day. If it hits the lower limit, sellers are rushing out and there are few buyers — the price stops falling. Trading can still happen at that limit price, but it cannot go beyond it until the next day.
The floor price — a price that cannot go lower
A floor price is a special rule the regulator sometimes sets during very nervous market times. It is a fixed minimum price for a share below which it is not allowed to be traded at all. The idea is to stop a frightening, never-ending slide. It has been used on the Dhaka market in difficult periods to calm panic and protect investors from steep losses.
The catch with floor prices
A floor price sounds protective, and in the short term it can be. But there is a downside. If buyers think a share is still too expensive at the floor, they simply will not buy — and because it cannot be sold any lower, it gets stuck. No buyers, no sellers, no trades. Your money can sit frozen in that share until the floor is lifted. That is why floor prices are debated: they stop the fall, but they can also trap people.
What this means for you
- If a stock is not moving, check whether it has hit a circuit limit or a floor price
- A share stuck at its floor can be hard to sell — buyers may simply stay away
- Circuit limits reset each day, so a stock can keep moving over several sessions
- These rules reduce panic, but they cannot make a weak company strong — fundamentals still matter most