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.–4:00 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 .
- Talk to us. Schwab is happy to discuss your portfolio whenever and wherever it’s convenient for you. Call us at , or .