Page 25 - Futures Money Machine-Study Session #3
P. 25
Understanding Futures
“Limit” Moves…
“Limits” were created in 1988 and “percentage move limits” have been used
since 1998.
“Limits” are calculated after each quarterly expiration of a futures contract
based on the average closing price for the contract.
“Limit Up”: The exchange sets this highest limit at what it thinks would be a
price that would cause manipulation or volatility. The price varies from
commodity to commodity.
“Limit Down”: Like “limit up”, the exchange sets the lowest limit at what it
thinks would be a low price that would cause manipulation or volatility. The
lowest price varies from commodity to commodity.
