What Day Traders Need to Know About Stock Halts

What Day Traders Need to Know About Stock Halts

August 6, 2018
|

A stock halt can be a scary event for a day trader.  Trading of the stock can be stopped by the exchange for various reasons that we’ll go in to.  But understanding what stock halts are about can reduce some of the anxiety.

Market Wide Stock Halts (very rare)

This occurs when there the exchange has technical or computer issues. This type of halt can last for minutes or longer.

Volatility Halts

The folks in charge of the market have created circuit breaker halts.  When a stock is halted it can reopen at a different price (higher or lower).

A stock that rises more than 10% in a 5 min period can be halted for five minutes. This is a volatility pause. When a stock is halted that is going up, it will usually open higher.

Halt Pending News

This is a more common type of halt where the trading of a stock is halted pending news on a company.  When a stock is halted pending news it means the company is going to release significant material news. When the news is released the stock will be given a scheduled time to re-open. Should the news be bad the stock can open down.

SEC Investigation Halt T-12

This type of halt is usually based on fraud or market manipulation. This type of halt is uncommon for higher priced stocks or more established companies. Stock halted pending investigation T-12 can be halted for days weeks or months. When a stock is halted it can reopen at a different price (higher or lower).

Day traders that have experience are mindful of these halts and have an in-depth knowledge of the many companies they’re trading. The worst of the halts listed above is the T 12 halt since it is the most dangerous.  As a day trader you will need to keep a keen eye on the stocks you are trading and keep up on news involving them.  If you’re day trading a stock making a big move up in only a few moments, you’re best to capitalize on your gains and move on.