Limit Up-Limit Down (LULD)
Limit Up-Limit Down (LULD) is the US market-wide rule that keeps each stock trading within price bands around a recent average and pauses trading for five minutes if a band is not restored.
Last verifiedHow it works
Under the Limit Up-Limit Down Plan, each NMS stock has an upper and lower price band calculated from a reference price, generally the average price of trades over the preceding five minutes. Trades outside the band are not allowed. If the best quote sits at a band without trades occurring inside it, the stock enters a limit state. If the limit state is not resolved within 15 seconds, the primary listing exchange declares a five-minute trading pause (shown as LUDP on halt feeds), then reopens the stock with an auction.
Band widths
Bands depend on the stock's tier and price:
| Reference price | Tier 1 (S&P 500, Russell 1000, some ETPs) | Tier 2 (other NMS stocks) |
|---|---|---|
| Above $3.00 | 5% | 10% |
| $0.75 to $3.00 | 20% | 20% |
| Below $0.75 | lesser of $0.15 or 75% | lesser of $0.15 or 75% |
Bands are doubled during parts of the opening and closing periods for some securities; the exact schedule is set by the Plan.
Worked example
Hypothetical: Company X is a Tier 2 stock with a five-minute average price of $5.00. Its bands are $4.50 and $5.50. If buyers push the quote to $5.50 and no trades print inside the band for 15 seconds, trading pauses for five minutes. If Company X were priced at $2.00, its bands would be 20% wide: $1.60 to $2.40.
Why it matters
Fast-moving small caps can be paused several times in one session. Each pause interrupts trading and ends with a reopening auction, which can print well away from the last trade. The reference price moves continuously, so the band follows the stock as it rises or falls.
How to spot it
LULD pauses appear on exchange halt feeds with code LUDP and in the Signal8 halts screener. The full Plan text is published by the LULD Plan participants. See Trading halts.
Guides that use this term
- How to Trade Penny Stocks Without Getting DilutedA dilution-first guide to penny stocks. How new shares reach the tape, which SEC filings announce them, worked examples, and a 20-minute filing check.
- Trading Halts Explained: Halt Codes and LULD PausesWhat trading halt codes T1, T2, T12, H10, LUDP and M mean, how Limit Up-Limit Down price bands trigger pauses, and how a halted stock reopens for trading.
- Trading Halt vs SEC Trading Suspension: Exchange Minutes or 10 Business DaysAn exchange trading halt and an SEC trading suspension compared: who orders each, how long they last, what markets they cover, and what happens afterward.
- Relative Volume (RVOL) and Premarket Trading ExplainedHow relative volume (RVOL) is calculated, how the 4:00 to 9:30 a.m. ET premarket session works, and why the baseline behind an RVOL figure changes the reading.
Related terms
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Definition from the Signal8 Academy glossary. Educational content only. DilutionScan and Signal8 are not broker-dealers or investment advisers, and nothing here is a recommendation to buy or sell any security.