A regulatory response to a case of extreme volatility in trading.This is meant to stop trading (and irrational buying or panic selling) when prices have changed or are expected to change soon by a specific amount. A trading halt is a temporary pause in trading on a specific stock or security or a futures contract. In the stock market, trading halt initiates due to occurrence of order imbalance (imbalance between buy orders and sell orders) and also as pending the outbreak of news about a given stock. For trading on a futures exchange, a halt may happen when the bid or ask price for a specific contract goes beyond the maximum price fluctuation.

Trading halts are typically used to restore market liquidity by allowing traders to have a pause to better assess the current situation and contemplate their next moves.