What is a trading halt?
- Author
- CRYPTO PORT Editorial
- Published
- Updated
- Reading time
- 4 min
In short
A trading halt is a temporary suspension of trading in an asset or across a market. It is meant to contain disorder during sharp moves, but from a user's side it means being unable to sell when you want to. Prices keep moving elsewhere, so trading can resume at a very different level.
Key points
- A temporary suspension for one asset or a whole market
- Intended to contain disorder and runaway errors
- You cannot sell while it lasts
- Prices can reopen far from where they stopped
Definition
A measure in which an exchange temporarily stops accepting or matching orders for an asset or an entire market, due to sharp price moves, system faults or material news.
Halts are triggered for several reasons: an extreme move in a short window, a fault discovered in the system, or material news about the asset. In each case, letting trading continue risks piling up fills at prices that do not reflect reality.
The criteria and procedures are set by each operator. Some have automatic triggers; others halt at the operator's discretion. Notices normally appear in the announcements section, though during fast moves there can be a lag before information is published.
What matters for users is that you are frozen in place. Prices continue moving on other venues and overseas markets, so trading can reopen at a sharply different level. Not concentrating funds in one venue is a practical way to keep that from being decisive.
Watch out for
- · You also lose the ability to act to limit a loss
- · Just after a reopen, prices are erratic and market orders fill poorly
- · Halt criteria and procedures vary by operator — check their guidance