Market Volatility, Trading Halts, and Circuit Breakers

What is a circuit breaker?

It’s a market mechanism designed to reduce panic sell-offs and encourage orderly trading.

How does it work?

In the event of a significant decline in the S&P 500® from the previous day’s closing price, during the regular trading session (9:30 a.m.–4 p.m. ET), trading on equities and options halts for 15 minutes or for the rest of the trading day—depending on the severity of the drop and the time at which it occurs.

What are the three levels at which circuit breakers are triggered?

  • Level 1: 7% decline before 3:25 p.m. ET, trading halts for 15 minutes. If it occurs after that time, trading does not halt.
  • Level 2: 13% decline before 3:25 p.m. ET, trading halts for 15 minutes. If it occurs after that time, trading does not halt.
  • Level 3: 20% decline at any time of day, trading halts for the remainder of the day.

A Level 1 or Level 2 halt can only occur once per trading day—so, if trading is halted once due to a 7% decline, prices must fall 13% before a second halt will be implemented.

What happens to my investments if trading halts?

Nothing happens to your positions. They just can’t be bought or sold until trading reopens again.

What you can do next

Focus on the long term. If you’ve built a solid financial plan and a well-diversified portfolio, it’s best to ignore the noise and focus on your long-term goals. Get additional guidance from Schwab’s experts on strategies for weathering market volatility.

Talk to us. Schwab is happy to discuss your portfolio whenever and wherever it’s convenient for you. Visit a branch or find a consultant.


Important Disclosures

The information provided here is for general informational purposes only and should not be considered an individualized recommendation or personalized investment advice. The investment strategies mentioned here may not be suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decision.

All expressions of opinion are subject to change without notice in reaction to shifting market or economic conditions. Data contained herein from third-party providers is obtained from what are considered reliable sources. However, its accuracy, completeness, or reliability cannot be guaranteed.

Indexes are unmanaged, do not incur management fees, costs, and expenses and cannot be invested in directly. For more information on indexes please see

Investing involves risks including loss of principal.

Diversification and asset allocation do not ensure a profit and do not protect against losses in declining markets.

Past performance is no guarantee of future results and the opinions presented cannot be viewed as an indicator of future performance.

The Schwab Center for Financial Research is a division of Charles Schwab & Co., Inc.