Understanding Sidecar and Circuit Breaker in the Stock Market

Understanding Sidecar and Circuit Breaker in the Stock Market

The stock market has mechanisms in place to protect investors from significant losses due to unexpected and large volatility. Among them, 'Sidecar' and 'Circuit Breaker' play crucial roles in the stock market. Let's briefly compare these two systems.

Sidecar
A sidecar is a measure that temporarily halts program trading when a stock index fluctuates sharply in a short period. It is used to prevent excessive price fluctuations and maintain market stability.

Circuit Breaker
A circuit breaker is a measure that temporarily suspends all stock trading when stock prices surge or plummet. It is used to prevent panic selling due to a sharp market decline and to provide investors with time to breathe.