The "drop limit" of Taiwan stocks unexpectedly triggered heated discussions among foreign villagers: Can you still play like this? What is the difference with US stock circuit breakers?

US news media Watcher.Guru, which has 3 million followers on the social platform X, aroused the curiosity of many foreign netizens after posting the news that the stock triggered the drop limit mechanism yesterday. (Synopsis: "Who cares about Taiwan" foreign tweet was choked: Chip overlord you dare to speak? Trump cancels tariffs, the stock market will turn V! (Background added: Kill!) Bitcoin pin 77,000 US dollars, Taiwan stocks plunged 2,000 points, Japan and South Korea stock market crash triggered circuit breaker) Taiwan's stock market yesterday plunged 2065.87 points to close at 19232.35 points under the shock of US counterpart tariffs, breaking the record for the largest closing decline in history, including TSMC (2330), MediaTek (2454), Hon Hai (2317), Fubon Gold (2881)... Equiweighted stocks also fell across the board. 7-day Taiwan stock record And Taiwan stocks continue to squirt out selling pressure at the opening of this (8th). As of noon, Taiwan's weighted index had fallen by 974 points, more than 5%, and nearly 500 listed stocks had fallen to the limit. Foreign netizens are curious about what is the drop limit mechanism? Interestingly, after the American media Watcher.Guru, which has 3 million followers on social platform X, posted the news of the introduction of the stock trigger limit mechanism and suspension of trading yesterday, because its English description is written "trading stopped, circuit breaker triggered" caused a number of foreign netizens to be full of question marks, did not expect that there was such an operation method? JUST IN: Taiwan stock market trading halted, circuit breaker triggered. — Watcher.Guru (@WatcherGuru) April 7, 2025 In this regard, some netizens helped explain that the drop limit mechanism is "to protect the rich from losing more money", "the suspension of trading will be triggered when it falls too much or too fast", "like our circuit breaker mechanism, the brokerage system will temporarily lock all transactions, let everyone calm down, To avoid retail investors continuing to panic sell, there is more time to consider the next step", "Taiwan's stock market is more special, there is a limit of rise & fall, used to prevent the market from getting out of control", "Everyone panic selling, falling too fast, so first intermission"... Although the drop limit mechanism is intended to avoid letting the market get out of control, some foreign netizens have criticized it, saying that it is very stupid, if everyone wants to sell, they should be allowed to sell, and cannot interfere with the decision-making of the free market. At the same time, some Taiwanese netizens commented that the market should not be too protective of investors, "Whatever you earn will give you a good profit, and the loss will help you stop the loss." However, some people also said that U.S. stocks also have a circuit breaker mechanism, the essence is similar to the drop limit mechanism, all are to avoid the market out of control means, and the rise and fall limit of Taiwan stocks is to lock the price without locking the transaction, foreign circuit breaker mechanism is directly locked trading, so there is no good criticism of this mechanism of Taiwan stocks. Threads netizen comment What is the difference between the price limit mechanism of Taiwan stocks and the circuit breaker mechanism of the United States and Japan? Price limit mechanism The price limit mechanism is designed to limit the price fluctuation range of a single stock in a trading day, preventing price fluctuations due to excessive speculation or panic. It controls market risk by setting the upper limit (up limit) and lower limit (down limit) of the price, giving investors time to digest information and make rational decisions. The price limit corresponds to the inability to continue rising after the stock price rises to the maximum increase specified by the exchange; The drop limit corresponds to the inability of the stock price to continue falling after falling to the maximum decline specified by the exchange. The price limit is usually based on the closing price of the previous trading day and is calculated based on a fixed percentage. The price limit mechanism of Taiwan stocks is as follows: General stocks: The daily price limit is ±10%. For example, the previous day's closing price was $100, the day's limit price was $110, and the limit price was $90. First day of new listing: There is no limit on the first day of trading, but there are other monitoring measures (such as suspension of trading when intraday volatility is too large). Trading after touching the price limit: when the price reaches the limit or limit, the stock will not stop trading, but the price is locked at the limit or limit and cannot be broken; Investors can still buy and sell pending orders, but the transaction depends on supply and demand (for example, if there are many more sell orders than buy orders when the limit is down, the volume may be extremely low). Sealing and opening: Sealing plate: a large number of buy orders (up limit) or sell orders (down limit) accumulate, resulting in the price is difficult to change, called sealing the price limit. Open board: If there is a large trade or the market sentiment changes, the price limit may be broken (such as someone buying a lot when the limit is down). Circuit breaker is also a market protection measure designed to suspend trading when the stock market falls sharply to prevent panic selling and market crashes. It is primarily aimed at the market as a whole, not individual stocks. Taking U.S. stocks as an example, the U.S. stock circuit breaker mechanism is developed by institutions such as the New York Stock Exchange (NYSE) and approved by the U.S. Securities and Exchange Commission (SEC), and is divided into three trigger thresholds, which determine actions based on the decline of the S&P 500 index: 1. Trigger: Level 1: The S&P 500 is down 7%. Level 2: The S&P 500 is down 13%. Level 3: The S&P 500 is down 20%. The decline is calculated on the basis of the closing point of the previous trading day. 2. Countermeasures: Level 1 (7%): If triggered before 3:25 p.m. ET, the market suspends trading for 15 minutes. If it is triggered after 3:25, it will not be suspended and the trade will continue until the close. Second level (13%): Same as the first level rule. Level 3 (20%): Whenever it is triggered, trading ends immediately on the day and the market closes early. 3. Resumption of trading: After the 15-minute pause ends, trading resumes in a collective auction and then resumes normal trading. If market sentiment is not stable, higher levels of circuit breakers may be triggered one after another. In general, circuit breakers are more common in the United States, Japan, India and other countries; The price limit mechanism is more common in China and Taiwan. Some countries, such as South Korea and India, use both, while mature markets such as the UK and Germany tend to have no hard limits. The effects and controversies of both mechanisms depend on market characteristics and regulatory objectives. Related reports Rich Dad warns: The biggest stock market crash in history has started, baby boomers may be destroyed, don't buy Bitcoin spot ETF Rich Dad Author: February will usher in the "worst stock market crash in history"! Billions of dollars will flow into bitcoin, gold Musk caused Tesla's stock price to collapse by 55%, Xie Jinhe bluntly said: He is the biggest loser in the stock market this year (Taiwan stock "drop stop" accidentally triggered heated discussions among foreign villagers: can you still play like this? What is the difference with US stock circuit breakers? This article was first published in BlockTempo's "Dynamic Trend - The Most Influential Blockchain News Media".