Stock Market Glossary

Lock up

Ban on sales for existing shareholders after an IPO.

In brief: Ban on sales for existing shareholders after an IPO.

Meaning in practice

Lock-up periods (often 90 to 180 days) are intended to prevent a wave of selling shortly after an IPO from depressing the price. The expiration of the deadline is a date that IPO investors should have carefully on their calendars.

Context for investors and traders

For traders, this term is most useful when preparing and executing an order. Its meaning depends on the venue, liquidity, time frame and order type. A single reading is not a reliable buy or sell decision.

How to use this in practice

In practice, the term should be linked to a specific trading plan: entry, exit, position size and costs belong together. In short time frames, spread, slippage and delayed execution can quickly outweigh the theoretical benefit of an observation.

What to keep in mind

Write down which observation confirms or invalidates your assumption before trading. This keeps the term a decision-making tool rather than a retrospective justification for risk already taken.

What does Lock up mean in simple terms?

Ban on sales for existing shareholders after an IPO.

When is this term relevant to investors?

Assess the term together with price, costs, position size and a predefined loss limit. That turns a market observation into a traceable framework rather than an automatic trading rule.

What should I check before acting on Lock up?

Write down which observation confirms or invalidates your assumption before trading. This keeps the term a decision-making tool rather than a retrospective justification for risk already taken.

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