What to Do If a Stock Halts


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Chemical company LSB Industries Inc. (NYSE:LXU) recently adjusted its dividend. This led to frenzied trading, which caused the New York Stock Exchange to pause trading. Temporary stock halts aren't uncommon, but they can signal larger issues in a company.

Investors, here's what to do if a stock you own halts.

What is a trading halt?

A stock halt, or trading halt, is a pause in trading for a particular stock. A company, stock exchange, or regulatory agency can impose a stock halt.

Exchanges may halt a stock because it's going through something called a "circuit breaker," aka severe downward movement. News, order imbalances, technical glitches, and regulatory issues can also cause halts.

Stock halts can signal bigger problems

In some cases, stock halts aren't all bad. Just look at GameStop (NYSE:GME), whose stock halted numerous times amid frenzied trading activity that sent the stock soaring by thousands of percent in a matter of weeks.
However, trading suspensions often signal issues within the company. Whether the company, exchange, or government imposes the halt tells investors where the issue lies.

How to know if a stock you own is halted

Most likely, you'll realize a stock is halted if you attempt to trade it and see there is a halt code on the ticker. However, you can also get notified as soon as it happens. Investors can set up trading halt alerts for stocks they own. Platforms like StockNinja.io offer automatic alerts.

Investors, here's what to do if a stock halts

The first thing you should do is look at the code associated with the halt. When a stock halts, the exchange it's listed on will provide a code that tells investors why trading is paused.

Codes include:

  • T1: News Pending

  • T2: News Released

  • T5: Single Stock Trading Pause in Effect (10%+ price change in 5 minutes)

  • H10: SEC Trading Suspension

You can find the reason for the halt on websites like NasdaqTrader.com (which lists the code) and MarketBeat.com (which lists the description of the code).

Then, look up the company and see if there is any news associated with it that could impose a stock halt. You can find news in SEC (Securities and Exchange Commission) filings or articles. See if you can find out who imposed the halt: the company, the exchange it's listed on, or the SEC?

Based on your research, decide whether you want to sell or hold your position once trading resumes. You will need to decide if you think the stock will recuperate in the short- or long-term.

Stock halts aren't all bad

Halts are actually here to help investors in a potentially volatile moment for a stock. You may still be able to protect your investment without selling. Conveniently, a stock halt gives you the time you need to look at the situation and weigh your options.

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