Definition
A trading halt is a temporary suspension of trading in a particular security or the entire market. Halts can occur for various reasons: pending news announcements, regulatory concerns, order imbalances, or significant price volatility (LULD halts). News-related halts allow all investors equal time to digest material information. Volatility halts provide time for markets to stabilize. Halts can last minutes or days depending on the cause, and trading resumes when the exchange determines orderly trading can continue.
Example
A biotech stock is halted at 10 AM pending FDA drug approval announcement. The halt lasts 30 minutes while the company issues a press release, ensuring all investors see the news before trading resumes.
FAQ
What is Trading Halt?
A temporary suspension of trading in a security by an exchange.
Why is Trading Halt important?
Trading Halt helps investors evaluate market structure and make more informed decisions.