Getting To Know The Term Auto Rejection In The World Of Plantation

Getting To Know The Term Auto Rejection (Image NordWood Themes - Unsplash)

YOGYAKARTA - What was in your mind when you first heard the word auto rejection? Don't be baper first guys, even though the rejection means rejection, but in the stock world, auto rejection is a trading mechanism whose goal is to protect investors!

In fact, the movement of the stock price is not arbitrary, it is illegal, but there is a the handler'. So, the auto rejection is an automatic rejection of the rate of movement of stock prices. In other words, there are maximum and minimum limits on costs. This aims to protect stock trading so that it is always within reasonable limits.

Auto Rejection is the minimum and maximum limitation of something to increase and shrink stock prices within a one-day trading period on the stock exchange. The stock exchange system will reject automatic incoming buying and selling orders if the share price has crossed the upper or lower limits that have been inaugurated by the Indonesia Stock Exchange. Auto rejection is implemented to justify the trading of shares running in a reasonable condition.

1. Upper Auto Rejection

Stocks that rose significantly until they held the upper limit that was inaugurated by the stock exchange would face the Upper Auto Rejection (ARA). The identity of the shares is that there are no more orders in the sale queue (offer).

For example, X's shares closed at a price of IDR 3.000 yesterday. The auto rejection limit at this share price is 25%. The increase in the share price of X today is a maximum of: IDR 3.000 + (IDR 3.000 x 25%) = IDR 3. 750. If X's shares have exceeded the price of IDR 3. 750 until X's shares will be hit by ARA.

2. Lower Auto Rejection

The Under Auto rejection (ARB) takes place when the share price drops significantly. The characteristics of the shares affected by ARB are that there are no more orders in line for buying (bid).

For example, Y's shares closed at a price of IDR 5.000 yesterday. The auto rejection limit that has been in effect since the pandemic is 7%. Installment of Y's share price is a maximum of IDR 5.000' (IDR 5.000 x 7%)= IDR 4.650. If Y's shares have reached the basic limit at IDR 4.650, until Y's shares will be affected by ARB.

Consequences For Auto Rejection Affected Shares

1. Auto rejection will be established in a very large share, in this case the stock exchange authority will stop offering the sale (offer) of the shares, in other words, it will limit the sale of its shares at a certain large price. Ordinary market participants call it Auto rejection (ARA).

2. Auto rejection also takes place on a stock with extreme price shrinkage. Authorities will stop activities at certain bids (bid). Ordinary market participants call it lower Auto rejection (ARB).

So after knowing the term auto rejection, see other interesting news on VOI, it's time to revolutionize news!