Yes. Bangladesh Stock Market allows circuit breaker. Currently Bangladesh Stock Market allows 10% circuit breaker in order to control the market. According to Dhaka Stock Exchange Frequently Ask Section,
“Circuit Breaker is the maximum permissible deviation of the price (specified as percentage) of the incoming order from the Circuit Breaker Base Price for that instrument. Orders violating circuit breaker will result rejection of the order.”
Source: Dhaka Stock Exchange Frequently Ask Question Section
So, Circuit Breaker is a restriction which allows all stocks to increase maximum 10% or decrease maximum 10% in a single trading day. Authority had enforced this law to control the market. For circuit breaker, a trader can lose maximum 10% or gain maximum 10% from a single stock.
It has both advantages and disadvantages. The main benefit: traders or investors can avoid unlimited loss from a stock. They also can’t gain unlimited from a single stock. Critics say that circuit breaker hinders the market to move its own spirit.
As fear is stronger than greed, circuit breaker can protect the capital in some extend. Otherwise, traders can protect capital by following stop loss in case they make trading mistakes.
In the above picture, you can see that PTL price has increased @9.92% in intraday. 13.30 tk was the price of PTL. Remember that price will not greater than 10% as upper circuit Bangladesh Stock Market is 10%.
IMAMBUTTON price decreased @6.81% in intraday. Lower circuit in Bangladesh Stock Market is 10%. So, price mustn’t exceed 10% below in a single trading day.
In Short
Circuit breaker relieves the traders and investors by minimizing risk. Without circuit breakers, lose and gain remain unlimited. Thanks to circuit breaker, maximum gain and lose are remained in a box.
Founder of The Financial Ask
