Hey, everyone Ross here from Warrior Trading. So today we're going to talk about stock halts. Now a stock call. It can be a prey.

scary thing, because when a stock is halted, you cannot buy or sell shares. So if you're in the stock while it's halted, you are literally stuck until it resumes trading. And when stocks are halted, between the time that they halt and the time they were zoomed trading, they can open at a very different price. I've seen stocks get halted at ten dollars and resume at thirty dollars a share.

but I've also seen stocks get halted at thirty dollars a share and resume at two dollars a share. So what happens during the halt that allows the price to change so much? All right. So when stocks get halted, there will be a halt code associated with the stock. The first one that we'll talk about today is called a T1 halt.

A T1 halt is when a stock is halted pending news. So a company can choose to release news. And typically when they release big news, they released the news pre market or after hours, and they'll be based on predetermined schedules, so they'll say they'll let everyone know. Okay, you know.

next. Friday At 5:00 P.m. we're releasing our quarterly earnings so everyone's anticipating it. But sometimes in the middle of the day, the company will feel they need to release news.

This could be for any number of reasons. One could be. for instance, and I've seen this a few times earnings have been leaked and now they feel like they need to pause halting in the middle or apposite rating in the middle of the day, halt the stock and go ahead and formally release the earnings that were elite you know to two news agencies or whatever other instances could be something suddenly has happened. It's very critical.

CEO is stepping down. You know something? Maybe a lawsuit has been filed? Those would typically be negative things, but there could be any number of different things that could cause a halt to take place in the middle a day. So when a company wants to release news in the middle of day, they'll contact the exchange. The exchange will help the stock.

It will say halted on a T1 code pending news and once the company has really the news, then the exchange will schedule the stock to resume trading as typically within an hour at most of when the news was released. So it'll start start trading again. And in the case of most T1 news release halts, you can expect that the stock will resume at a different price and when it was halted, if the news is good, it will resume higher. If the news is bad, it will resume lower.

And the reason that happens is because before the stock resumes, trainers are already putting in their orders to either buy or sell. and so by the time the market opens, they match the current supply and demand and that is what creates the change in price. So a T1 halt can be concerning and the time that it's probably the most concerning. and I've seen this a lot.

As a trader who often trades lower priced stocks is when a stock will be up maybe a hundred or two hundred percent on no news whatsoever. Sometimes the company will feel they need to respond to the price action. They'll ask the exchange to halt the stock. They'll release the headline, which is that there is no fundamental news to account for the move, and typically the stock will resume lower as you have confirmation that there is no news.

Sometimes these stocks will move higher because people think maybe somebody knows something. maybe there is news coming out, but then when the company formally says there's no news, they go down. So T12 T21 Hall is the one that we see fairly often. T12 Hult is halted, requiring additional information by the exchange.

This is not a good haul - to see if you're holding a stock. To the long side, this has been called the equivalent of a company being brought into the principal's office. Basically what it means is the exchange has decided on their own to halt trading in the company, and this could be because they suspect that there's something not appropriate going on within the current trading activity. And typically where we see T12 halts is when you have a company that is going up 100, 200, 300, 400, 500 on no news at all, right? And so that's when the exchange says well if the company's not going to request that we halt it so they can release news, we're going to go ahead and help the stock.

It's a T12 halt and now the company has to come to us and say what's going on and what a lot of times happens is the company will say there is no news to account for this move and when the trading does resume, it will resume a lot lower because all of the fear and greed and emotion that was tied into the squeeze up now kind of the bubble gets burst and the cop stock comes back down. So T1 halts and T12 halts are both fairly common, T1 being more common and then the third type of halt that we see pretty often is called a circuit breaker halt and the the code is L Uld limit up, limit down So this is a very interesting type of halt. We see this probably the most frequently out of all of the halt types, and there's a couple others, but I won't get into those now. So the L Uld halt.

The way this works is after the flash crash regulators want to create a mechanism of preventing stocks from dropping 50% and bouncing right back up because that was a problem. Investors who had stop orders on their accounts, the market dropped their stop orders, got fired, and then the market went right back up. So they just got stopped out. for, you know, millions of dollars of losses only to see the market get right back to where it was.

And so what happened was. You know, a couple stop orders triggered, more sell orders triggered, then more stop orders trigger, then more sell orders trigger and create this flash crash. So circuit breaker halts were created to stop that from happening. Give moments of pause in the market and the way these rules are written is there based on thresholds.

So a stock is. Stocks fall into different categories of what their thresholds will be, but typically from 9:45 until I Believe 3:45 in the afternoon. If a stock moves up more than 10% within 5 minutes, it will be halted for a 5 minute long circuit breaker. Hall This is a volatility trading pause.

It gives investors and traders a moment to sort of take a breath, digest the news. If there is any, then the stock will resume. Sometimes these halts will be extended for 10 minutes so we'll see either a 5 minute long haul or a 10 minute long halt. And there are some instances where lower priced stocks the threshold is higher.

it needs to go up 20% or in the lowest priced stocks, it needs to go up 40% And that's to accommodate the larger amount of volatility that we typically see in lower priced stocks. And I believe for exchange-traded funds, they may have an even lower threshold of 5% or something like that. There's a whole graph on all of the different thresholds, and sometimes they don't even totally make sense because you'll be looking at a stock and it'll be up 10 percent in the last 5 minutes. But it's not halted.

And one of the things that you have to realize is that the way the volatility circuit-breaker bands work is, they're looking at the average price of the last 5 minutes. So the So: if you're looking at the price from 5 minutes ago to right now, well, the average price is in the middle, so it needs to be up 10 percent from the middle. So being up 10% in 5 minutes doesn't necessarily cut it. It might need to be morally up 10 percent in two and a half minutes.

So these are some of the nuances here that can make anticipating circuit-breaker halts a little bit more difficult. but you can expect that if you're actively trading a stock moving anywhere in the range of 10 percent or more every 5 minutes that there is a risk of a circuit breaker halt. And occasionally circuit breaker halts will turn in to a T12 halt or a T1 halt as either the exchange or the company wants to get a better sense of what's going on with the stock. All right.

So I hope this has helped you understand Circuit Breaker House. There's like I said, some nuances here, but it's something that is good to know. And as usual, if you have any questions, don't hesitate to reach out if you're still watching. You must have really enjoyed that video.

So why not subscribe and get email alerts any time? I upload new content. Remember when you subscribe, you become a member of the Warrior Trading Family.