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  1. Home
  2. /Glossary
  3. /Circuit Breaker
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trading

Circuit Breaker

A mechanism that halts trading when prices move too much too fast.

Definition

A mechanism that halts trading when prices move too much too fast. Traditional stock exchanges have mandatory circuit breakers. Some crypto exchanges implement similar systems to prevent flash crashes, though most crypto markets trade 24/7 without circuit breakers, which contributes to their volatility.

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Related Terms

Flash Crash

A sudden, severe price drop that happens within minutes or even seconds, often caused by cascading liquidations or a large sell order on thin order books.

Volatility

How much an asset's price fluctuates over time.

Exchange

A marketplace where cryptocurrencies are bought and sold.

Accumulation Phase

A period when smart money quietly buys up an asset before a major price move.

Annualized Return

The average yearly return on an investment, calculated to account for compounding.

Arbitrage

Profiting from price differences of the same asset across different markets.

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