If youâve never been in a car crash before, you might not think itâs a big dealâŠ
A few dents in your car that insurance will fix, and maybe you feel sore for a few days.
But once youâre in a car crash, youâre like âWow, this is a big deal.â
Your car is totaled, youâre hurt or sore, and you have to deal with insurance agents, doctors, and car body shops.
Even a minor car crash is a big hassle nobody wants to deal with.
Besides the risks of bodily harm, itâs a lot like encountering a halt when youâre in a trade.
If it hasnât happened to you, you might not think itâs a big dealâŠ
But when you have money on the line and you canât get out of a trade â to cut losses or take profits â itâs a stressful situation.
You donât know if the stock will open higher or lower and how fast it will moveâŠ
You donât know where to put your sell order, or if it will get filled when the stock opens.
If you traded Safe and Green Development Corporation (NASDAQ: SGD) on Friday, you probably know the experience all too wellâŠ
So today Iâm giving you tips to help you deal with trading halts. Whether you want to avoid them completely or be able to keep your head on straight in a sticky situationâŠ
3 Tips for Managing Halts When Trading
My morning trade plan for Safe and Green Development Corporation (NASDAQ: SGD) that I sent to subscribers on Friday morning worked out perfectlyâŠ
I gave an entry at $1.64 (which was also Oracleâs signal), a risk level at $1.40, and a goal of $2+âŠ
And we got the dip and rip move after 9:45 am, which was the timeline I preached about waiting for all morning.
SGD chart: 1-day, 1-minute candle â courtesy of StocksToTrade.com
But if you traded my plan, you wouldâve been stuck in a volatility halt.
After the stock hit my signal, it spiked and halted around $1.88 per share. You mightâve felt like a deer in headlights or in shock like you were just in the car crash I described earlierâŠ
But halts donât have to feel overwhelming and stressful.
Thereâs nothing you can do once youâre stuck in a halt except plan your exit.
And my advice is to always exit as soon as trading resumes.
It doesnât matter if the stock opens higher or lower â get out.
In the case of my SGD trade idea, the stock gapped up after the halt and was above the $2 goal for the trade. Thatâs great news for anyone with a position ⊠But that doesnât mean you should get greedy.
These stocks can easily gap down after halts, and if you freeze even for a second, you can be down a lot more. The stock can even halt down leaving you at the mercy of the market.
Instead, keep your wits about you. Have a plan to enter a limit order as soon as the stock opens and prioritize speed to avoid damage to your account.
If halts sound like too wild of a ride for you and you want to avoid them as much as possible, here are my two tips for youâŠ
- Time Your Trades: Avoid trading during the volatile opening minutes of the market. Wait until after 9:45 AM to reduce the risk of encountering halts early in your trades. This isnât a guarantee you wonât get caught in halts â SGD halted most of the morning. So to add an extra layer of protection from halts you can wait until the afternoon and look for VWAP hold high of day breaks. Or avoid low-priced, volatile stocks on their first day of big moves.
- Choose Stability: Opt for higher-priced, more stable stocks that offer significant movement without the constant threat of halts. âReal stocksâ or even mid-cap stocks have a low risk of volatility halts. They have larger floats so move slower. These are stocks that are great for swing trading, buying breakouts, or weak open red to green moves.
You can learn to swing trade and go over my swing trade picking process with me live every Monday evening ⊠Itâs part of the training I offer to our IRIS AI subscribers.
Learn more about how our IRIS AI picks and delivers swing trade ideas here.
If you want to continue to trade volatile low-float stocks, youâll have to deal with volatility halts.
Use my tips to help you avoid them or manage positions when in a halt and youâll reduce negative impacts on your account as much as possible.
Have a great day everyone. See you back here tomorrow.
Tim Bohen
Lead Trainer, StocksToTrade