Limit Up Limit Down (LULD) is a market mechanism designed to prevent excessive volatility in stock prices. It establishes price bands for individual securities, which restrict how much a stock can rise or fall within a trading day. If a stock hits its upper or lower limit, trading is paused for a short period to allow investors to reassess the situation. This system aims to promote orderly trading and protect investors from sudden price swings. By implementing LULD, exchanges like the New York Stock Exchange and NASDAQ help maintain market stability during periods of high volatility or significant news events.