Chapter 5 · Reading the price screen
Circuit limits and why they can trap you
A daily band that stops a price moving too far — and can make a stock impossible to exit.
26 of 50 · 7 min
NEPSE applies a limit on how far a price may move in a single session. Once a stock reaches that band it is described as circuit-locked, and trading in it is restricted for the rest of the session.
The intention is protective: it slows panic and gives participants time to think. The consequence is that it can remove your ability to act at exactly the moment you most want to.
What follows from that
- Position size matters more in a circuit market than in a continuous one.
- A stop loss cannot protect you if there is nobody on the other side.
- Thin stocks lock more easily than liquid ones, because it takes less to move them.
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