What Happens During a Trading Halt (and How to Trade After)

Understanding Trading Halts: The Basics

A trading halt is a temporary stop in trading activity for a security across all U.S. exchanges. The pause typically lasts 5-15 minutes, though it can extend longer if circumstances warrant. During a halt, no trades execute. No bids, no asks, no fills. The market literally freezes.

This isn't a punishment. It's a circuit breaker designed to protect retail and institutional investors from making panic-driven decisions during moments of extreme uncertainty.

Who Orders a Trading Halt?

The SEC or the exchange itself—never the company. A CEO can't call the exchange and say, "Halt our stock while I fix this problem." That's a critical distinction that separates halts from company-controlled announcements.

The SEC will halt trading under Regulation SHO Rule 10b-21 when:

• A company has pending news that would materially affect the stock price
• Trading becomes extraordinarily volatile (volatility halts)
• There's evidence of market manipulation or irregular trading activity
• The company's financial disclosures are questionable or delayed
• Information dissemination is uneven—some traders know news that others don't

How Long Does a Halt Last?

Standard halts run 5-15 minutes. Once the exchange confirms news has been widely disseminated, trading resumes. But if the company hasn't disclosed the reason for the halt by the time the window closes, regulators can extend it for another 10 minutes. In rare cases—like fraud investigations or serious financial restatements—halts have lasted hours or days.

Example: Tesla (TSLA) was halted on March 16, 2016, after Elon Musk tweeted news of Model 3 pre-orders. The halt lasted 23 minutes while the market processed the impact. That's not the norm, but it shows how regulators extend halts when news is significant enough to require additional processing time.

Types of Trading Halts and What Triggers Them

News-Related Halts (The Most Common)

A company announces earnings, a merger, a restatement, or regulatory action. The halt gives the market time to digest the information evenly. Everyone stops trading simultaneously, so no one has an information advantage in the first minutes of price discovery.

Real Example: Bed Bath & Beyond (BBBY) halted multiple times in 2023 as the company announced store closures and restructuring plans. On June 27, 2023, BBBY was halted for news at $2.31. When it reopened 11 minutes later, it gapped down to $1.89—a 18% collapse in one candle. The halt didn't prevent the drop; it just prevented the chaos of a disorderly plunge.

Volatility Halts

These trigger when a stock moves 10% or more in 5 minutes. The exchange pauses trading to calm the selling or buying pressure and give traders a moment to think.

Volatility halts are more common in small-cap and micro-cap names with low trading volume. A $50,000 buy order in a 100,000-share average daily volume stock can spike the price 15% instantly. A volatility halt interrupts that momentum.

Trading Irregularity Halts

These are rarer but significant. The exchange detects abnormal trading patterns—unusually high options flow, sudden block trades, or signs of market manipulation. The halt gives the SEC time to investigate.

You won't see these announced ahead of time. They happen mid-day and often signal serious problems under the surface.

What Happens to Your Orders During a Halt

This is where most traders get blindsided. Your open orders don't wait in the queue and execute when trading resumes. They're cancelled.

You submitted a limit order to sell 1,000 shares of XYZ at $45 before the halt. The halt hits at $44.20. When trading resumes 10 minutes later, your order is gone. It's as if it never existed.

How Brokers Handle Order Cancellations

Most brokers automatically cancel all pending orders when a halt is announced. Some require you to re-enter orders after the market reopens. A few advanced platforms will let you queue orders before the halt lifts, but the order won't execute until after the halt is officially over and the market is trading again.

Here's the critical part: Once trading resumes, there's often a 30-60 second period of extreme volatility before the stock finds equilibrium. That's when retail traders often panic-buy or panic-sell at terrible prices.

Pre-Halt vs. Post-Halt Price Action

The price at which a halt occurs is rarely the price where it reopens. Here's why:

• News released during the halt shifts supply and demand fundamentally
• Market makers reprice their spreads based on the new information
• Institutional traders reposition ahead of the reopening
• Retail traders panic, triggering stop orders that weren't in the system during the halt

If a stock halts at $50 on takeover news, it might reopen at $55 or $45 depending on whether the deal is attractive or disappointing. The halt pauses price discovery—it doesn't preserve your entry price.

Real-World Examples of Trading Halts

Case Study 1: Gamestop (GME) Volatility Halt—June 2021

On June 9, 2021, GME halted three times in a single trading session due to extreme volatility. The stock swung from $232 to $340 and back down, each swing triggering a 10%+ move in 5 minutes. Each halt lasted 5-10 minutes.

What happened? Retail traders on Reddit coordinated large buy orders. That created artificial demand. Each halt reset the momentum briefly, but when trading resumed, the same coordinated buying pressure resumed. By close, GME was up 28% for the day at $338.

The lesson: Volatility halts can work in or against your position depending on what's driving the move. But you can't plan around them. You either stay flat or you accept the risk of getting gapped against you on the open.

Case Study 2: SVB Financial (SIVB) News Halt—March 2023

On March 10, 2023, Silicon Valley Bank announced a $1.75 billion loss on bond sales. The news triggered immediate selling. SIVB halted at $106 for news dissemination. When it reopened 10 minutes later, it crashed to $42—a 60% gap down in a single candle.

Traders who had limit orders to sell at $95 watched them disappear during the halt. When they re-entered new orders on the reopening, they got filled at $42. That's the risk of illiquidity meeting volatility halts.

The lesson: Halts on financial institutions or biotech stocks (where approval/denial news is common) are particularly dangerous. The gaps can be violent.

Case Study 3: Nvidia (NVDA) News Halt—May 2024

NVDA halted on May 21, 2024, at $1,065 after announcing better-than-expected earnings. The halt lasted 10 minutes while the market processed the news. When trading resumed, NVDA opened up 7% to $1,140, then climbed another 5% through the session close.

This is the opposite of SIVB. Good news = gap up. But the mechanics are identical: pre-halt orders were wiped, and the reopening price reflected new information, not the halt price.

How to Trade After a Halt (And When to Sit Out)

The First 30 Seconds: Where Not to Trade

The worst time to trade is in the first 30 seconds after a halt lifts. Here's why:

• Spreads widen dramatically: A stock that traded $0.01 wide before the halt might open $0.50 wide on the reopen. Bid-ask spreads explode because market makers have repriced risk
• Volatility is unpredictable: The first move might be 8% up, then 5% down, then 3% up. You can't read the direction until the market settles
• Your order might not fill where you expect: You submit a limit order at the bid price. By the time your broker sends it, the market has moved three cents higher
• Institutions are executing programs: Large funds are systematically rebalancing after the news. Their algorithms move the price in ways that have nothing to do with fair value

Professional day traders often take a 60-90 second break when a stock reopens from a halt. They let the volatility settle and the spreads normalize before they enter. Patience here saves money.

The 2-5 Minute Window: Better Risk/Reward

After 2-3 minutes, the initial shock trading has mostly played out. The bid-ask spreads start to normalize. Volume becomes more predictable. This is a more tradeable window if you want to play the rebound or continuation.

But your thesis has to have changed with the news. If the halt was due to bad earnings, the stock likely won't bounce just because it reopened. If the halt was due to a takeover bid at a premium price, that's a clearer reason to buy the dip.

Key Rules for Trading Post-Halt

Rule 1: Reassess your position premise. Before you place any order after a halt, ask: Does the news change why I wanted to be in this trade? If you were short BBBY and the company announced store closures, that's vindication—your thesis is intact. If you were long and got caught, does the new information make the stock cheaper or is it genuinely broken?

Rule 2: Assume wide spreads for 5 minutes. Limit orders are your friend. Avoid market orders at the reopening. Wait for at least two large trades to execute at your target price before you send your order.

Rule 3: Check for extended halts or trading halts on the news venues. If the SEC halted for a restatement, there may be more news coming. Check the company's investor relations website, the SEC's halt list, and financial news wires before re-entering.

Rule 4: Reduce your position size after a halt. A stock that halted and gapped against you has already proven it's more volatile than you anticipated. Taking half your normal position size on the reopening gives you the opportunity to profit if the move continues, but limits damage if it reverses.

Common Mistakes Traders Make With Halts

Mistake 1: Assuming You Can "Play the Gap"

This is the most expensive mistake. A trader thinks: "The stock halted at $50, it'll probably gap up on good news. I'll buy at $52 after it reopens and sell at $58 for a quick 6-point win."

What actually happens: The stock reopens at $54, making a quick move to $55, then pulls back to $51 by lunch. You're underwater and you exit at $49, turning a would-be 4-point gain into a 3-point loss. Halts are unpredictable. Don't predict the gap—wait for the settlement and trade what you see, not what you think will happen.

Mistake 2: Using Alerts on Halt-Prone Stocks Without Context

You set an alert for "TSLA down 8% in one minute." The alert fires, you see the drop, and you assume it's your entry signal. But the price is dropping because of a halt, not a selloff. The halt resolves in 7 minutes with mixed news. By the time you're "in," the move is already halfway through and spreads are normalizing against you.

Better approach: Subscribe to the SEC's halt alert feed or use a platform like Haltstocks.com that logs halts as they happen. Then decide if the halt is material enough to trade.

Mistake 3: Holding Through a Halt on a Margin Account

A position that's underwater gets halted. During the halt, the stock's true value becomes clear—it's worse than you thought. When it reopens, it gaps against you hard. Your margin account triggers a forced liquidation at the worst possible price because you have no liquidity and the broker has to cover the loss immediately.

If you're on margin and you're holding into a halt-prone scenario, tighten your stops. The halt can move the stop against you before you even have a chance to exit.

Mistake 4: Ignoring Halt History

Some stocks halt frequently. Biotech names halt constantly around FDA announcements. Pre-revenue spacs halt on funding news. Low-float momentum stocks halt on volatility. If you're going to day trade a stock, know its halt history. Does it have a pattern? Do halts tend to resolve bullish or bearish for this particular ticker?

A stock like TSLA halts maybe 1-2 times per year. A stock like a development-stage biotech might halt 4-5 times per year. The more halts in the history, the more unpredictable the reopenings tend to be.

Comparison: Halts vs. Other Trading Pauses

How to Find Halt Information

Real-Time Halt Alerts

Several platforms provide live halt notifications:

• Haltstocks.com: Free website that logs halts within 30 seconds. No subscriptions required. Useful for finding what halted during market hours and why
• SEC Halt List: The official source at sec.gov/cgi-bin shows all halts with timestamps and reasons
• Your broker's news feed: Most professional brokers (TD Ameritrade, E*TRADE, Interactive Brokers) push halt notifications to your terminal
• Twitter/X alerts: Follow @HaltStockNews or similar accounts that notify traders immediately when halts occur

Researching Halt History

Before you trade a stock frequently, pull its halt history. Search for "[TICKER] trading halt" on Google with a date range. Financial databases like Bloomberg and FactSet have halt archives. Understanding the pattern helps you know what to expect.

Example: NVIDIA rarely halts. Tesla halts occasionally. Speculative biotech halts frequently. That's your context for position sizing and risk management.

FAQ: Trading Halts Explained

Q: Can I place orders during a trading halt?
A: No. Your broker's platform will block order submissions during an active halt. Once the halt lifts, you can place new orders, but any orders you placed before the halt are cancelled and won't be in the queue.

Q: Does a trading halt mean the stock is delisted?
A: No. A halt is a temporary pause, usually 5-15 minutes. A delisting is a permanent removal from the exchange. A halt is regulatory (protecting traders from information asymmetry). A delisting is disciplinary.

Q: What's the difference between a halt and a suspension?
A: A halt is brief and usually resolves within minutes once news is disseminated. A suspension is longer-term, often lasting days or weeks, and usually signals serious regulatory issues like accounting fraud or SEC investigations. You can't trade during either, but a suspension is far more severe.

Q: If a stock halts while I'm in a position, what happens to my profit/loss?
A: Your position stays open. The unrealized P/L freezes at the halt price. Once the market reopens, the position re-marks to the new price. If it gaps against you, your loss increases immediately. You don't get to exit during the halt—you have to wait for the reopening.

Q: Can I short a stock immediately after it halts?
A: In theory yes, but in practice, the bid-ask spread is so wide and volatility so high in the first minute after a reopening that shorting is dangerous. The stock might rip 10% higher before you even get your short filled, and then it crashes 8% lower, locking you into a bad short. Wait 2-3 minutes for spreads to normalize.

Q: How do I know if a halt is "good news" or "bad news" halts?
A: The SEC doesn't flag it. You have to check the news. Pull the ticker on a financial news site (Yahoo Finance, Bloomberg, Seeking Alpha) and look for the press release or SEC filing that prompted the halt. That's your only way to know if you're looking at a buyout announcement or a going-concern warning.

Key Risk Management After a Halt

Stop-Loss Placement

If you're holding through a halt, place your stop-loss 5-10% wider than you normally would. A halt can gap a stock 8-12% in seconds, and your stop might get blown through before you can exit. A wider stop acknowledges the halt risk without costing you the trade upside if the news is favorable.

Position Sizing

Reduce your normal position size by 25-30% on halt-prone names. The extra volatility and execution risk justify a smaller stake. You're not avoiding the trade—you're right-sizing the risk for the additional volatility halts introduce.

Time-Based Exits

If you're trading the rebound after a halt, give yourself a 5-minute window to prove the trade. If you're not up 2-3% within 5 minutes of the reopening, exit. Don't hold a halt rebound past 9:40 a.m. ET if the halt happened at market open. The moves are short-lived and the execution costs are high.

Next Steps: Integrating Halt Awareness Into Your Trading Plan

Halts are part of the market fabric. You can't avoid them. But you can prepare for them. Here's what to do:

• Step 1: Review the halt history of your 5 most-traded tickers. How often do they halt? What triggers halts? Is the pattern bullish or bearish?
• Step 2: Set up a halt alert system (Haltstocks, broker notifications, or Twitter) so you know when a halt happens within 30 seconds
• Step 3: Write a rule into your trading plan: "If I'm holding a halt-prone stock, I tighten my stop by 50% and reduce position size by 25%."
• Step 4: Practice the 60-90 second pause. When a halt reopens, force yourself to sit out the first minute. Watch the price action without trading. This builds discipline and prevents panic entries
• Step 5: Track your halt trades separately in your journal. Note the halt reason, the price at halt, the reopening price, and your P/L. Over time, you'll see patterns in which halts are profitable for you

This is foundational knowledge for any day trader. Halts aren't exotic edge cases—they happen multiple times every week across the market. The traders who understand halts and plan for them avoid costly mistakes. The traders who ignore halts get caught flat-footed and lose money unnecessarily.

This article is part of our Day Trading guide. For broader context on day trading mechanics, risk management, and trading psychology, check out our hub article: "How to Day Trade: A Realistic Guide for 2026."