Trading Halts

Trading Halts Meaning and Rules

Trading halts are typically something you see when day trading. Usually, they occur when there’s news, order correction, a technical glitch, or the SEC is concerned with something. Sometimes, there is just massive volatility, and the whole market will stop dead in its tracks and not trade for some time (to cool off).

A trading halt is the temporary suspension of trading for a particular security or securities at one exchange or across numerous exchanges for a specific time. In other words, a halt stops trading for some time for an investigation. Halts can happen numerous times throughout the day and have various durations depending on the situation.

Trading Halts
An example of a halt from 10/22/2020. The price moved greater than 5% in 5 minutes, triggering the halt

Have you ever been in the middle of a day trade that’s flying, and suddenly, there’s a trading halt? That isn’t always fun because you don’t know when the stock will resume or in what direction it’ll resume. Halts can be nerve-wracking for traders, and some will avoid the types of stocks that have a greater chance of halting (low float stocks, for example)

However, the move that usually results in a halt is pretty fun if you are on the long side of the trade and it spikes in a favorable direction. Parabolic movers move a large volume, and the price jumps quickly. This usually occurs because of an institutional trader’s careless order, news good or bad, or buy and sell orders triggering when support or resistance is breached. (Buy stops!)

That usually causes the stock to shoot up in price quickly. The S.E.C. sees that and issues a trading halt. This is called a volatility halt and is an L.U.D.P. code. In essence, the price freezes until the halt is over. Volatility pauses are 5 minutes. L.U.D.P. stands for limit up and down and is only triggered if the stock’s average price goes up or down more than 5% in 5 minutes.

Is There a Time Limit?

There’s no time limit on some trading halts. It can last several months or forever, depending on the issue. Some stocks have halted and never resumed trading. What happens to the people that were in trades with that stock? Usually, it’s a lost trade for them.

Some stocks will stay halted for up to 6 months. If you’re in a stock that halts for that long, you must wait for it to resume. There’s nothing to be done.

Many times, however, trading halts resume within minutes. Open orders that haven’t been filled can be canceled when a trading halt occurs. That way, you don’t end up on the wrong side of a halt that resumes trading.

Trading Halt Codes

Code Description Definition
T1 News Pending Trading is halted pending the release of material news. (good or bad) Bad news would be an "offering." The good news would be a buyout
T2 News Released The news has begun disseminating through a Regulation FD-compliant method(s). (News is out, and it's time for the market to digest it)
T5 Single Stock Trading Pause in Effect In five minutes, NASDAQ has paused trading due to a price move of 10% or more in the security. (A stock is moving too fast, and the exchange pauses things to calm it down)
T6 Extraordinary Market Activity NASDAQ determines that such extraordinary market activity is likely to have a material effect on the market for that security; and 1) NASDAQ believes that such extraordinary market activity is caused by the misuse or malfunction of an electronic quotation, communication, reporting or execution system operated by or linked to NASDAQ; or 2) after consultation with either a national securities exchange trading the security on an unlisted trading privileges basis or a non-NASDAQ FINRA facility trading the security, NASDAQ believes such extraordinary market activity is caused by the misuse or malfunction of an electronic quotation, communication, reporting or execution system operated by or linked to such national securities exchange or non- NASDAQ FINRA facility. (this is a potential glitch that the exchange feels needs to be fixed. The market pauses while they fix it)
T8 Exchange-Traded-Fund (ETF) Trading is halted in an ETF due to the consideration of, among other factors: 1) the extent to which trading has ceased in the underlying security(s); 2) whether trading has been halted or suspended in the primary market(s) for any combination of underlying securities accounting for 20% or more of the applicable current index group value; 3) the presence of other unusual conditions or circumstances deemed to be detrimental to the maintenance of a fair and orderly market.
T12 Additional Information Requested by NASDAQ NASDAQ questions must be answered

Codes Continued

Code Description Definition
H4 Non-compliance Trading is halted due to the company's non-compliance with NASDAQ listing requirements. (This isn't good! The company has made a serious error and has serious concerns)
H9 Not Current Trading is halted because the company is not currently filing its required documents. (Also not good, probably something they can fix, but it takes time)
H10 SEC Trading Suspension The SEC has suspended trading in this stock. (They usually have a good reason for this. These types of halts could be indefinite)
H11 Regulatory Concern Trading is halted in conjunction with another exchange or market for regulatory reasons. (Not terrible, but it could cause the pause for a few days or weeks usually)
O1 Operations Halt, Contact Market Operations. This is a minor halt
IPO1 HIPO Issue Not Yet Trading Initial public offering issues, usually fixable fairly quickly
M1 Corporate Action The S&P 500 falls a certain percentage below previous close
M2 Quotation Not Available Halt requested by company
LUDP Volatility Trading Pause The stock is moving too fast, maybe 5% in a single 1-minute candle, for example
LUDS Volatility Trading Pause Straddle Condition
MWC1 Market Wide Circuit Breaker Halt - Level 1 This probably means the market is tanking fast
MWC2 Market Wide Circuit Breaker Halt - Level 2 This means the market is tanking fast or there are major communications problems
MWC3 Market Wide Circuit Breaker Halt - Level 3 It's the end of the world! Just kidding, it's just another level of the halt, and it could be a big deal or event affecting the stock market
MWC0 Market Wide Circuit Breaker Halt Carry over from the previous day (the market is closed for volatility due to an event, and no one can buy or sell until politicians quiet the noise 🙂

Trading Halt Breakdown

Often, good and bad news causes a dramatic price swing. As a result, companies will agree to give news to the major exchanges before it hits the public. This is often why news is released after hours.

That gives traders time to decide how they want to play a stock. However, there are times when news will come out during trading hours. As a result, the exchanges will halt a stock. This is because they want the information to get out there fairly.

Although, if you’re in the stock that’s halted, you may not see that as fair. Many things can cause a trading halt—for example, a company’s financial status changes, mergers and acquisitions, or restructuring.

Sometimes, a company will issue a recall on its product, or there are changes to upper management. If you trade using fundamental analysis, you know management can make or break a company.

There are legal issues that can stop a company from being able to function properly. All of these things are components that cause trading halts. Many times, halts occur on small-cap stocks like penny stocks.

Our trade room are up on any halt that occurs, especially when our members are in the trade.

Near Market Open

Doesn’t seem like trading halts occur pretty quickly after the market opens? As stated above, many companies wait until after the market to release news. It gives traders time to make a plan.

However, it can also cause the buy and sell orders to get out of whack. As a result, an exchange can decide to halt a stock when the market opens to get the buying and selling under control.

How Long Do Trading Halts Last?

Trading halts typically last 5 minutes. The SEC can halt a stock for up to 10 days to investigate it further. Sometimes, the SEC feels that trading certain stocks is unsafe for the public. Usually, this occurs when a company hasn’t filed its financial reports or statements. Sometimes, a halt lasts much longer than ten days, though.

That’s when your funds can be trapped in a halt. However, a halt lasting longer than ten days is called a trading suspension. Find a service that isn’t pumping stocks, which could cause a halt.

Final Thoughts

Trading halts put a temporary stop to trading certain stocks. Many times, they’re stocks that have a lot of volatility. Since day traders are hunters of volatility, these can be attractive stocks to trade. With anything in trading, it’s all about being safe and trading with proper risk management. 

Frequently Asked Questions

A trading halt usually means that a company has news coming out that could affect the stock price. Or there's a large order imbalance between buyers and sellers. 

A halt isn't good or bad news per se. It doesn't reflect on the company, but it can affect traders in that stock when trading resumes. 

It is not illegal to halt trading on a stock. The SEC can halt a stock for up to 10 days. If it goes past ten days, it's now considered a stock suspension. 

If a stock is halted, you can't buy or sell during that time. Once trading resumes, you can start buying and selling again. 

Related Articles

What Is a Pullback

What Is a Pullback?

Have you ever wondered why some stocks temporarily drop in value after an upward trend? This is called a pullback, a temporary decline that can

Read More »
Floating Stock

Floating Stock Definition

Have you ever noticed companies with large bid-ask spreads? There is a significant difference between a stock’s buying and selling price. What is the reason

Read More »


If you’ve looked for trading education elsewhere then you’ll notice that it can be very costly.

We are opposed to charging ridiculous amounts to access experience and quality information. 

That being said, our website is a great resource for traders or investors of all levels to learn about day trading stocks, futures, and options. Swing trading too! 

On our site, you will find thousands of dollars worth of free online trading courses, tutorials, and reviews.

We put all of the tools available to traders to the test and give you first-hand experience in stock trading you won’t find elsewhere.

Our content is packed with the essential knowledge that’s needed to help you to become a successful trader.

It’s important to treat day trading stocks, options, futures, and swing trading like you would with getting a professional degree, a new trade, or starting any new career.

Invest the proper time into your Trading Education and don’t try to run before you learn to crawl. Trading stocks is not a get-rich-quick scheme. It’s not gambling either, though there are people who treat it this way. Don’t be that person! 


The Bullish Bears team focuses on keeping things as simple as possible in our online trading courses and chat rooms. We provide our members with courses of all different trading levels and topics.

If you’re a beginner, intermediate level, or looking for expert trading knowledge…we’ve got you covered. 

We have a basic stock trading course, swing trading course, 2 day trading courses, 2 options courses, 2 candlesticks courses, and broker courses to help you get started. Free.

Just choose the course level that you’re most interested in and get started on the right path now. Become a leader, not a follower. When you’re ready you can join our chat rooms and access our Next Level training library. No rush. We’re here to help.

Click Here to take our free courses.