| 1. | Electricity. Also called breaker. a device for interrupting an electric circuit to prevent excessive current, as that caused by a short circuit, from damaging the apparatus in the circuit or from causing a fire. |
| 2. | any property-tax relief measure that reduces or limits property taxes for certain eligible taxpayers, as those with low income or the elderly. |
| circuit breaker n. An automatic switch that stops the flow of electric current in a suddenly overloaded or otherwise abnormally stressed electric circuit. |
Circuit Breaker
Refers to any of the measures used by stock exchanges during large sell-offs to avert panic selling. Sometimes called a "collar."
Investopedia Commentary
After an index has fallen a certain percentage, the exchange might activate trading halts or restrictions on program trading. For example, if the Dow Jones Industrial Average falls by 10%, the NYSE might halt market trading for one hour. There are other circuit breakers for 20% and 30% falls.
Related Links
Capitulation Defined
The Greatest Market Crashes
How Investors Often Cause The Market's Problems
See also: Black Monday, Collar, Panic Selling, Program Trading, Trading Curb, Trading Halt
Also spelled: circut
circuit breaker
| circuit breaker
A switch that automatically interrupts the flow of electric current if the current exceeds a preset limit, measured in amperes. Circuit breakers are used most often as a safety precaution where excessive current through a circuit could be hazardous. Unlike fuses, they can usually be reset and reused. |