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Position Limit

Maximum position size permitted by exchanges, regulators, or internal policy to control concentration risk.

A position limit sets the maximum allowable holdings for a trader or entity in a specific commodity or contract.

In oil markets, position limits prevent market manipulation, excessive speculation, and systemic risk. Limits apply to exchanges and sometimes OTC markets.

Exceeding limits may trigger regulatory action, forced liquidation, or fines. Traders plan portfolios to remain within thresholds.

Position limits enhance market integrity and maintain orderly trading conditions.

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