Market volatility, circuit breakers, and trading halts | Robinhood

Market volatility, circuit breakers, and trading halts

A volatile market is often characterized by extreme price fluctuations and widespread uncertainty. It’s difficult to guess what will impact the stock market.

During these moments, your investment portfolio might seemingly plummet or soar based on rumors like the Fed might change interest rates, the government may approve an industry bailout, or the president might issue an executive order.

What’s a circuit breaker?

After the 1987 stock market crash, known as Black Monday, the US Securities and Exchange Commission adopted market-wide circuit breakers, or certain thresholds at which trading is halted for a pre-defined period of time. These circuit breakers were updated in 2012 to make them more meaningful in today’s high speed electronic markets.

What’s a market-wide trading halt?

A market-wide trading halt is like a timeout that’s designed to curtail panic selling during volatile periods. When halts are issued by US equities, options, and futures exchanges, all trading stops on their exchanges.

The following are circuit breakers that can trigger market-wide halts in the US.

  • Level 1: The S&P 500 drops 7% from its closing price the previous day, triggering a 15-minute trading halt.
  • Level 2: The S&P 500 drops 13% from its closing price the previous day, triggering another 15-minute trading halt.
  • Level 3: The S&P 500 drops 20% from its closing price the previous day, and trading is suspended for the remainder of the day.

Note that Level 1 and 2 halts may only happen once per trading day. That means if the S&P 500 slides by 7% (resulting in a 15-minute timeout), trading would only stop again if the decline reaches 13% or more. Likewise, if the S&P 500 drops by 13% (again, resulting in a 15-minute suspension), trading would only cease if the downturn reaches 20%.

Keep in mind, Level 1 and Level 2 circuit breakers can only take effect before 3:25 PM ET. At and after 3:25 PM ET, only a Level 3 halt—a 20% decline in the S&P 500—would cause trading to stop for the day.

Regular US stock market trading hours are 9:30 AM-4:00 PM ET.

Can I place new orders during a halt?

Yes, you can place new orders during a trading halt but they won’t be processed until the market reopens.

All new and outstanding orders will remain pending until markets reopen. When the halt ends, your orders will be processed. Keep in mind, market orders held or placed during a halt may fill at a very different price when trading resumes.

Can I use my account during a halt?

Yes, you can still use your Robinhood account during a trading halt. You’ll be able to view your positions and read your news feed during a trading halt. While you can place new orders during the halt, they won't be processed until the market reopens.

What about pending orders?

Outstanding or pending orders, including market and limit orders, won’t be processed until the halt is over and markets reopen, which also applies to options orders. Note that market orders held or placed during a halt may fill at a very different price when trading resumes.

Why are charts flat during a trading halt?

When trading is halted, charts reflect the price of the last filled order. No trades are being executed, so prices neither rise, nor fall. Rest assured, the price most likely didn’t flatline at zero. When the market reopens, the chart will update accordingly.

Why do options prices display as $0.01 during a trading halt?

During a trading halt, no orders are being processed so the mark price defaults to the $0.01 in the app. Market prices will update accordingly after the halt is over.

Can I still trade crypto during a halt?

Yes. Trading halts imposed by US equities, options, and futures exchanges don’t directly affect crypto trading.

Can I deposit or withdraw money during a halt?

Yes. You can deposit or withdraw funds as you normally would.

I have a concern about an order placed during a trading halt.

If you believe one of your orders was affected by a trading halt and still have questions, please get in touch with our support team. Please provide as much information as you can about the order(s) you placed and share any questions. We’re happy to assist you.

Russia sanctions

In response to Russia’s attack on Ukraine, the US and other countries have introduced sanctions to disconnect Russia from global economic access, including restricting access to capital. On February 28, 2022, major US stock exchanges NYSE and NASDAQ halted trading of Russian companies listed on their respective exchanges. That means people can’t buy and sell those companies through any US-based broker dealer, including Robinhood.

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All investing involves risk.

Brokerage services are offered through Robinhood Financial LLC, (“RHF”) a registered broker-dealer (member SIPC) and clearing services through Robinhood Securities, LLC, (“RHS”) a registered broker dealer (member SIPC). Cryptocurrency services are offered through Robinhood Crypto, LLC (“RHC”) (NMLS ID: 1702840). The Robinhood Money spending account is offered through Robinhood Money, LLC (“RHY”) (NMLS ID: 1990968), a licensed money transmitter. Credit card products are offered by Robinhood Credit, Inc. (“RCT“) (NMLS ID: 1781911 and issued by Coastal Community Bank, Member FDIC, pursuant to a license from Visa U.S.A. Inc.

The Robinhood Cash Card is a prepaid card issued by Sutton Bank, Member FDIC, pursuant to a license from Mastercard® International Incorporated. RHF, RHY, RHC and RHS are affiliated entities and wholly owned subsidiaries of Robinhood Markets, Inc. RHF, RHY, RHC and RHS are not banks. Securities products offered by RHF are not FDIC insured and involve risk, including possible loss of principal. Cryptocurrencies held in RHC accounts are not covered by FDIC or SIPC protections and are not regulated by FINRA. RHY products are not subject to SIPC coverage but funds held in the Robinhood Money spending account and Robinhood Cash Card account may be eligible for FDIC pass-through insurance (review the Robinhood Cash Card Agreement and the Robinhood Spending Account Agreement).

Options trading entails significant risk and is not appropriate for all customers. Customers must read and understand the Characteristics and Risks of Standardized Options before engaging in any options trading strategies. Options transactions are often complex and may involve the potential of losing the entire investment in a relatively short period of time. Certain complex options strategies carry additional risk, including the potential for losses that may exceed the original investment amount.

Commission-free trading of stocks, ETFs and options refers to $0 commissions for Robinhood Financial self-directed individual cash or margin brokerage accounts that trade U.S. listed securities and certain OTC securities electronically. Keep in mind, other fees such as trading (non-commission) fees, Gold subscription fees, wire transfer fees, and paper statement fees may apply to your brokerage account. Please see Robinhood Financial's Fee Schedule to learn more.

© 2024 Robinhood. All rights reserved.