Many Stock Market terms trend to be confusing for people who are beginners or doesn’t come from finance background. One of them is Price Freeze in Stock Market, most people connect it with circuit limits which is completely a myth.
Table of Contents
Introduction
The prices of all the stocks vary significantly in both up and down sides. People trade in this volatility according to their risk capacity.
However, sometime people see a situation where price of any stock stop moving on either side. let’s discuss the definition of it and than we will discuss the types of it as well.
Price Freeze meaning
Due to news or any reason which creates lack of availability of seller or buyers in some stocks make a unique situation. During this situation stock price will stop moving on either side from current market price. This is called Price Freeze in Stock Market.
It happens due to non-availability of buyers or seller and it has nothing to do with circuit limits.
Types of Price Freeze in Stock Market
In any share traded on an exchange, there are two kinds of price freezes.
Buying Freeze in stock market
When, you want to purchase a specific share from an exchange, but there isn’t any seller around. This is called “Buying Freeze”. Since you would be unable to purchase the specific share. However, You can sell the share at the maximum rate bid by the buyer if there is a buying freeze.
If you want to acquire share which is on buying freeze, you must place an order for it at the exact rate as the maximum rate offered by any seller. In the order entry book, you cannot write a lower price than the maximum cost.
Note
“Buying Freeze” is not the same as “Upper Circuit.” In the “Upper Circuit,” the price limit is more important than the seller’s availability.
Selling Freeze
This is completely reverse of a buying freeze. If you’re witnessing “Selling Freeze,” you won’t be able to sell your share anytime soon because there ‘s no one willing to buy it. However, in this case, you can acquire the share at the cheapest rate available from the seller.
If you wish to sell your share in any case, you must place an order for it to be sold at the specific price which is same as the cheapest rate offered previously. You cannot place an order for your share to be sold for higher than the lowest price. When a buyer arrives, the selling order will be carried through.
Note
This is not the same case as “Lower Circuit.” In a lower circuit, the price limit is key, but in a “Selling Freeze,” it is the buyers that are essential.
Conclusion
This kinds of words are look simple and similar to some other words. However difference between them is quite huge. So we should make a habit of reading about those words instead of just guessing them.
This is all from our side about Price Freeze in Stock Market . We hope we are able to clear your doubts about Price Freeze in Stock Market .
Other Interesting Blog
FAQ About What is Price Freeze?
How many types of Price Freeze in Stock Market?
There are two types of Price Freeze - Buying Freeze and Selling Freeze.
Is Price Freeze and Circuit Limits are same?
No, Both of them are completely different from each other.
Will anyone be able to sell its shares during the buying freeze on the stock market?
Yes, You can sell your stocks on maximum price available for the stock.
Can anyone able to buy shares during selling Freeze in stock market?
Yes, You can buy shares at minimum available price of the share during selling freeze.
Do we have any rule for Price Freeze in Stock market?
No, such a rule for price freeze as it only happens due to non- availability.
