In this video, you will learn about stock halt, the reasons for it coming into force, and some advantages and disadvantages.
#stockhalt #stockmarket #wallstreetmojo #stockexchange #regulator
Chapters:
00:00 – Introduction
00:32 – What happens when a stock is halted?
01:16 – Reasons for a halt
02:11 – Advantages
02:54 – Disadvantages
03:27 – Conclusion
What happens when a stock is halted?
When a stock is halted, it cannot be traded on any exchange. Even brokers are restricted from buying or selling the stocks for themselves and their clients.
Stock halts are not seen often; it happens only when the situation arises and is in place for a small period of time.
Reasons for halt
Trading in stock is halted because its price keeps increasing or decreasing a lot, and it becomes difficult to control. This happens when there’s a lot of volatility caused by many people speculating on the stock’s price.
One primary reason for this behavior would be news releases. However, the SEC may also impose a stock halt if they discover that a company has been involved in some malpractices.
Advantages
The most apparent advantage of a stock halt is that it protects stocks from becoming victims of panic buying or selling.
By halting trading in a stock for a while, market participants are given time to re-evaluate and reconsider.
(Explained in detail in the video)
Disadvantages
It is seen that after a stock’s price increases unprecedently, a halt is imposed, and after it is lifted, the price comes crashing down, showing no signs of stopping.
This can cause losses to traders and investors that were unfortunately caught buying the top.
This will be all for this video. Subscribe to the channel, like the video, and share it with others.
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