What is Circuit Breaker: Definition & Meaning Explained

Definition of Circuit Breaker

A circuit breaker or market curb is a measure that exchanges use to put a stop to all trading activities across an index or entire market. This regulatory measure is put in place to curb panic selling, especially when markets are in free fall.

That’s why circuit breakers are also known as trading curbs and are put in place when an index or market reaches a specific level. These are the current circuit breaker limits on NSE:

Circuit Breaker Trigger	Trading Halt Duration
10%	0-45 minutes
15%	45 minutes; 1 hour 45 minutes; rest of the day
20%	Rest of the day

Firm Allotment

Firm Allotment is the process of allocating shares during an IPO to investors who are not considered to be retail public investors. The firm allotment is done as per SEBI guidelines, which dictate that a portion of the IPO can be allocated to the likes of Mutual Funds, regular employees (permanent), and others.

The complete list of firm allotments for investors by allocation is as follows.

Foreign Institutional Investors (FIIs): 30%
Development Financial Institutions (DFIs): 20%
Mutual Funds: 20%
Regular Employees (permanent): 10%
Employee of Promoting Company: 10%
Lead Bankers: 5%

Any leftover percentage can be allocated to promoters.

Deferred Tax Asset

A deferred tax asset is an item on a company’s financial statement that can be used to get tax relief, generally in the event of overpaying taxes or net losses that are carried forward.

Companies tend to deduct these overpayments or losses for accounting purposes and to reduce their overall taxable income. Common examples of deferred tax assets include:

Depreciation of fixed assets
Net financial loss
Bad debt

Advance/Decline Line

An Advance/Decline Line can help you plot the daily difference between the number of advancing and declining stocks.

As a result, the Advance/Decline Line is a technical indicator used to gauge market sentiment, price trends, and trend reversals.

Here’s how the Advance/Decline Line is calculated:

Calculate the number of stocks that finished in the red.
Calculate the number of stocks that finished in the green.
Subtract #1 from #2 to find out the net movement aka Net Advance.
Repeat #1, #2, and #3 the next day and add the values for Net Advance.
Add both the previous day’s and the present day’s Net Advance. Repeat for future calculations.

Abandoned Baby Pattern

An Abandoned Baby Pattern is a type of candlestick pattern that signals the reversal of a bullish or bearish trend. It is made up of three candles, each of which varies based on the trend.

Bullish Abandoned Baby Pattern

Candle #1: Red in color & forms during a downward trend
Candle #2: Forms a Doji Star below Candle #1’s closing price
Candle #3: Leads to a bullish trend & forms above the Doji Star (similar size to Candle #1)

Bearish Abandoned Baby Pattern

Candle #1: Green in color & forms during an upward trend
Candle #2: Forms a Doji Star above Candle #1’s closing price
Candle #3: Leads to a bearish trend & forms below the Doji Star (similar size to Candle #1)

Book Value

Book value of an asset is what you get by subtracting its accumulated depreciation from the original cost of the asset.

That’s why book value is referred to as the Net Asset Value (NAV) in the UK.

For a company, the book value is its total assets subtracted by liabilities, intangible assets and/or goodwill.

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Circuit Breaker

Circuit Breaker

Definition of Circuit Breaker

Firm Allotment

Deferred Tax Asset

Advance/Decline Line

Abandoned Baby Pattern

Bullish Abandoned Baby Pattern

Bearish Abandoned Baby Pattern

Forex Futures Trading

Book Value

Invest & Trade with a Trading
Platform That's #MadeForTrade

Circuit Breaker

Circuit Breaker

Definition of Circuit Breaker

Firm Allotment

Deferred Tax Asset

Advance/Decline Line

Abandoned Baby Pattern

Bullish Abandoned Baby Pattern

Bearish Abandoned Baby Pattern

Forex Futures Trading

Book Value

Invest & Trade with a Trading Platform That's #MadeForTrade

Invest & Trade with a Trading
Platform That's #MadeForTrade