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Pre-trade risk check

Automated limits applied before an order reaches the market — maximum size, price bands, notional caps, message rates and duplicate detection.

Checks exist because software fails faster than humans can react. In the US they are mandatory under the market-access-rule, and they must be under the broker's control rather than the client's.

Typical layers: maximum order quantity, maximum notional per order and per day, a price band around the current market, restricted symbol lists, short-sale locate verification and message throttles.

Example: a fat finger turns a 500-share order into 500,000 on a $80 stock — $40 million of notional. A $1 million per-order notional cap rejects it instantly. Without the cap, the order sweeps the book, moves the stock 3%, and leaves a position that may take all day and several hundred thousand dollars to unwind.

Related: market-access-rule, kill-switch, order-rejection, api-trading

Educational only, not advice. Spotted an error? Post in Site Feedback.