Understanding Trading Halts and Its Impact on Stock Investors


Understanding the trading halt and its impact on investors, this term is often encountered in the stock world. In the world of investing and stocks, there are many terms used.

It is used to be able to know market conditions. So that traders are able to overcome whatever conditions are happening.

For those of you who have invested in the Indonesian Stock Exchange or IDX, you will be familiar with the term trading halt.

However, as a beginner trader or investor, you must know the meaning of trading halts in the stock world. To find out more clearly, you can see the full review below.

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Understanding Trading Halt in the World of Stocks

As many investors have done, investing is not a simple thing nowadays. But there are many strategies that investors can do with the aim of getting big profits.

However, not all traders or investors can run it well. To become a reliable trader you need to know various terms in the stock world.

It aims to be able to know the price movements and market conditions that are happening.

That way, you can do what’s supposed to happen. As is the case when experiencing a trading halt.

The definition of a trading halt itself is a complete cessation of stock trading on the stock exchange. Usually occurs within 30 minutes.

This is due to the Jakarta Composite Index or JCI falling within a certain time limit. As a general rule, a trading halt occurs if the JCI experiences a correction of up to 5% within one day.

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The purpose of this condition is to be able to handle emergency conditions. Even in order to maintain orderly, efficient, and fair securities trading.

As for those who regulate and supervise it within the Financial Services Authority, it is stated in Number S-274/PM.21/2020 dated March 10, 2020.

The contents of the regulation are orders to halt trading on the IDX when the capital market is under pressure to decipher. So when there is a serious decline, the stock exchange must take appropriate action. These actions include:

  • Temporarily pauses stock trading for approximately 30 minutes during sustained declines of up to 10%.
  • Pause trading if the JCI experiences a decline of more than 5%.
  • Trading is suspended if the JCI experiences a further decline of more than 15%. This suspended trading can last until the end of trading after obtaining permission from OJK.

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The Impact of Trading Halts for Investors

The trading halt experienced a trading halt within 30 minutes. The cessation of trading in this case also has a serious impact on investors.

This is because the trading halt will prevent the execution of orders sent on the stock trading platform. However, this also has a serious impact on investors.

Starting from preventing a further fall in the JCI in a short time and providing space and time for reconsideration in deciding their investment.

Even able to cope with the selling action due to many investors experiencing panic selling. For that, as an investor you need to know the meaning of trading halts to be able to overcome them and feel the impact that will really happen. (R10/HR-Online)


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