GLOSSARY // Day Trading
Trading Halt
A trading halt is a temporary pause in trading of a single stock, imposed either for pending news or for excessive volatility. News halts (code T1) let material information disseminate before trading resumes; volatility halts fire automatically under the Limit Up-Limit Down (LULD) mechanism.
LULD sets price bands around a rolling reference price: 5% for Tier 1 securities (S&P 500 and Russell 1000 members plus certain ETPs), 10% for other Tier 2 stocks, and 20% for stocks priced at $3.00 or below. If the price sits at the band for 15 seconds without reverting, trading pauses for five minutes; repeated halts can chain back to back on fast movers.
For day traders the practical risks are the resume prints. A halted stock reopens via auction, often far from the last pre-halt price, and stop orders provide no protection through a halt.
A $2.40 stock spikes 20% in under a minute and pins its upper LULD band at $2.88. Trading pauses for five minutes, reopens at $3.05 — another 6% higher, and 27% above where it traded a minute before the spike — halts again on the way up, and eventually reprices through four consecutive halts. Anyone short through the sequence had no ability to cover until each reopen.
Related terms
Educational only — not financial advice. Definitions simplified for clarity; markets are messier than definitions.