Limit
In futures trading, a "limit" (often "price limit" or "daily limit") is the maximum amount a contract's price is allowed to move in a single trading session, set by the exchange that lists it. It is a circuit-breaker built into the contract itself, not something a trader chooses.
Each futures product has its own limit, usually expressed as a fixed number of points or dollars above and below the previous settlement price. Once the market trades at that outer boundary, it is said to be "limit up" or "limit down." Depending on the exchange's rules, trading may stop entirely for the rest of the session, pause temporarily, or continue but only within the limit band — no trades are allowed to print beyond it.
The nuance that catches people out is that "limit" here has nothing to do with a limit order (an instruction to buy or sell at a specified price or better). A contract can be "at its limit" regardless of what order types anyone is using; it is a market-wide ceiling or floor on price movement itself, not a personal order placed by a trader. The two concepts share a word but describe completely different things.
Exchanges sometimes expand the limit for the next session if a market closes at its limit, or use tiered limits that widen after an initial band is hit. The exact size of the limit, how it expands, and what happens to trading once it is reached all vary by contract and by exchange, and can be changed by the exchange over time.
This term depends on a rule or threshold that changes over time, so no specific figure is quoted here. The specific point/dollar size of daily price limits, whether they expand after being hit, and whether trading halts or merely restricts at the limit all vary by exchange and contract and change periodically. A human should confirm current limit values and mechanics against the relevant exchange's contract specifications (e.g., CME, ICE) before publishing any specific numbers.
If a contract goes limit-up or limit-down, a day trader can be locked into a position with no way to exit at a reasonable price, or find that further favorable moves simply cannot be captured until the limit resets — so it directly affects both risk and the feasibility of getting out of a trade.
Suppose a grain futures contract settled yesterday at 450 and the exchange sets its daily limit at 30 points. If the market trades up to 480 today, it is "limit up," and depending on the exchange's rules no trades may be permitted above that price for the rest of the session, even if buyers are willing to pay more.
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