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Strategies & Market Trends : The Final Frontier - Online Remote Trading
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To: TFF who wrote (12569)5/19/2010 6:54:30 AM
From: Eric P1 Recommendation  Read Replies (1) of 12617
 
I've heard mixed interpretations of the SEC proposal. A 5 minute trading halt anytime a stock is down 10% (between 9:45 AM to 3:35 PM) seems like a bad idea to me, since often stocks will grind lower throughout the day and eventually be down 10-15% with steady selling all day => This is a situation that doesn't need a trading halt.

Another interpretation I've heard is that the halt would only trigger for stocks that drop 10% within a 5 minute period. This makes perfect sense to me, and seems a valid situation worthy of a halt. The only thing that might be a problem with this, is if they don't halt for stock spikes higher. In that case, you could have a $20 stock spike up to $24 (no halt), and then encounter a stock trading halt if the spike was to reverse back lower.

In any case, I like the idea of a trading halt for any stock that drops (or rises) more than 10% within a time period of 5 minutes. I'm hoping that is what is being proposed.
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