NASDAQ trading halts, explained

How the price corridor works

Limit Up-Limit Down (LULD) is the volatility safeguard behind almost every halt UpCuit tracks. During regular hours (9:30 a.m.–4:00 p.m. ET) it draws a moving price corridor around each stock.

The centre of the corridor is the reference price — the simple (arithmetic) average of trade prices over the previous five minutes, not a volume-weighted average (VWAP). It drifts with the market, and the exchange recalculates it through the day. The upper and lower bands sit a fixed percentage above and below it, set by the LULD Plan based on the stock’s tier and price (see below).

When a band touch becomes a halt

When the best offer (the lowest sell price) drops to the lower band — a limit-down condition — or the best bid (the highest buy price) rises to the upper band (limit up), the stock enters a Limit State. If trading moves back inside the band within 15 seconds, nothing happens. If it is still pinned to the band after 15 seconds, the primary listing exchange declares a trading pause of at least five minutes across every U.S. market.

A related “straddle state” — where one side of the market sits outside the band — is flagged separately as LUDS.

How wide the band is

It depends on the stock’s tier and price. Tier 1 (the S&P 500, the Russell 1000, and major ETFs) uses a ±5% band above $3.00; Tier 2 (every other stock) uses ±10%. From $0.75 to $3.00 both tiers use 20%, and under $0.75 the band is the lesser of $0.15 or 75% of the price. So lower-priced, less liquid names get the widest bands — and pause most often.

The reopening auction (the cross)

A halted stock doesn’t just resume at its last price. The exchange reopens it with an auction (a “cross”) that pools the buy and sell orders on both sides and finds the single price that trades the most shares. As new orders arrive, it publishes an indicative price and the order imbalance.

The 5-minute rule: a minimum, not a timer

The five minutes is a minimum, not a timer that lifts the halt. When it elapses, the primary exchange runs the reopening auction, and trading resumes only once that auction can clear at a price within the reopening collars. A LUDP pause ends when the auction prices — usually right around five minutes, not the instant the clock hits 0:00. UpCuit’s countdown estimates that first reopening attempt.

When the auction can’t clear

If the auction can’t clear within its collars — the price would land outside them, or market orders remain unpaired (a market-order imbalance that can’t be filled within the collar) — the pause extends about five minutes and tries again. With each extension the reopening collar widens on the side of the imbalance (on Nasdaq, by 5% of the LULD reference price in effect when the pause began, or $0.15 for sub-$3 stocks), while the other side stays pinned to the band that triggered the pause. There is no fixed maximum: the stock stays halted until the auction can finally clear.