Limit Down

See: Limit Order.

A limit down represents a type of limit order.

You own a stock currently sitting at $25. You decide to take the day off from trading to go see a performance of Wagner's complete Der Ring des Nibelungen.

You're worried about a big sell off while you're away, so you put a limit down order in place. If the stock drops by $5 a share, your broker will automatically sell.

These "limit down" situations can be more general as well. Some exchanges have limit down barriers that kick in if a stock or commodity (or whatever) drops too far too fast. If an asset hits this limit down level, trading curbs come into play.

See: Limit Move.