What are ingredients for a market disaster? Look no further than the three words above: oil war, pandemic and travel ban.

The combined effect of all these three fuels uncertainty and fear in the markets.

Just moments ago, as I was preparing to write this post, the circuit breaker for the Dow Jones was triggered as it plunged 7%.

A market circuit breaker is a mechanism which once an index or individual stock drops below a certain threshold, the trading halts temporarily to allow people to cool down. This is to prevent panic selling.

Currently for the US stock market, there are 3 levels of circuit breaker:

Let us take a closer look at the recent events.

The Organization