What is a circuit breaker (price lock) on the PSX?

A circuit breaker is a built-in limit on how far a share's price is allowed to move within a single trading day. When a stock reaches the cap, it becomes locked — trading can continue at the limit price, but the price cannot move further in that direction for the rest of the session. Investors often describe this as a stock being "upper locked" (limit up) or "lower locked" (limit down).

The purpose is to curb extreme, panic-driven volatility and give the market time to digest news. By preventing a stock from crashing or spiking uncontrollably in one day, circuit breakers reduce the risk of disorderly trading, error-driven cascades, and manipulation, and they give investors a chance to react more calmly to information.

On the Pakistan Stock Exchange, individual stocks have daily price limits set relative to the previous day's closing price, expressed as a percentage and/or a fixed rupee amount (whichever applies under the exchange's rules). Once a share rises or falls to that boundary, it sits at the limit. If demand or supply is overwhelming, the stock can stay locked at the limit with large unmatched orders queued on one side.

A few things follow from this:

- Upper lock usually signals strong buying interest — often after good news — with buyers unable to push the price higher that day and sellers scarce. - Lower lock signals heavy selling pressure, where would-be sellers may struggle to find buyers at the limit price, making it hard to exit. - A stock can hit the limit early and remain locked, or it can touch and rebound. Repeated locks over consecutive days indicate a powerful trend or a significant development.

Circuit breakers come in two broad forms: stock-level limits like those above, and, in some markets, market-wide halts that pause all trading if a benchmark index falls by a large amount in a day. The aim in both cases is the same — a deliberate cooling-off mechanism.

For investors, circuit breakers are a double-edged tool. They protect against runaway moves, but a lock can also trap you: if a stock is lower-locked, you may be unable to sell at the price you want until the lock clears, sometimes only on a later day. Understanding price limits helps set realistic expectations during fast-moving, news-driven sessions.