Definition
A circuit breaker is a rule used in the stock market to temporarily stop trading when prices move too much in a short time. It helps prevent panic buying or selling and gives investors time to think before making decisions.
Example
When the market index falls by a certain percentage (like 10% or more) in a day, trading may be paused for some time. This pause is called a circuit breaker.
Caution
Circuit breakers are meant to control extreme market movements, but they do not stop prices from falling or rising after trading resumes. Investors should stay calm and avoid making decisions based on panic.