- In the United States, the New York Stock Exchange and the Nasdaq are open weekdays from 9:30 a.m. to 4 p.m. EST.
- Extended trading hours are available to retail and institutional investors via electronic communications networks.
- Trading outside of normal hours comes with risks, including price uncertainty, less liquidity, and higher volatility.
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If the regular trading hours on Wall Street are from 9:30 a.m. to 4 p.m., shouldn’t we stop hearing about the market’s rises and dips at lunchtime?
Well, trading hours aren’t that simple. Trading doesn’t stop when markets close, and it doesn’t necessarily start when markets open, thanks to before and after-hours trading.
After hours trading is nothing new, but it has become more accessible to retail traders due to the rise of electronic communications networks, or ECNs. These digital systems facilitate trade beyond traditional hours, directly connecting buyers and sellers without a middleman.
However, just because extended trading hours is an option, doesn’t necessarily mean you should take it. Trading outside of regular hours carries risks like less
and higher prices.
What time does the stock market open?
The two main US stock exchanges are the New York Stock Exchange (NYSE) and the Nasdaq. They are both based in New York City and are open Monday through Friday 9:30 am to 4:00 pm EST.
After normal trading hours, the stock markets only close nine federal holidays. On early closing days, generally the days before and after a public holiday, regular trading ends at 1 p.m.
You might think trading stops outside of regular trading hours, but there is more to the story. Most equity futures, which are contracts traders use to speculate on the price of an underlying asset and trade in the direction of that index, start trading at 6 p.m. EST on Sunday. This is why it is not uncommon to see a title linked to the stock markets this weekend.
Trading hours on stock markets around the world
For individuals who wish to invest in international trade, this is an option, but the time disparities can present a challenge. Many international exchanges have the same local time schedules as those in the United States. And while traders can place orders before the open, trades should be executed during the hours this market is operating.
Here are the regular trading hours for some of the the biggest exchanges in the world:
- Canada: the Toronto Stock Exchange has a market capitalization of $ 2.1 trillion and operates from 9:30 a.m. to 4:00 p.m. EST.
- China: the Shanghai Stock Exchange has a market capitalization of $ 4.9 trillion and operates locally from 9:30 a.m. to 3 p.m. or 9:30 p.m. to 3 a.m. EST.
- Hong Kong: the Hong Kong Stock Exchange has a market capitalization of $ 4.4 trillion and operates locally from 9:30 a.m. to 4 p.m. or 9:30 p.m. to 4 a.m. EST.
- India: the Bombay Stock Exchange has a market capitalization of $ 1.7 trillion and operates locally from 9 a.m. to 4 p.m. or 11:30 p.m. to 6:30 a.m. EST.
- Japan: the Tokyo Stock Exchange is the largest Japanese stock exchange and the second in the world, with a market capitalization of $ 5.7 trillion. It operates locally from 9 a.m. to 3 p.m. or 8 p.m. to 2 a.m. EST.
- Netherlands: Euronext is based in the Netherlands and is the largest stock exchange in Europe, with a market capitalization of $ 3.9 trillion. It operates locally from 8:00 a.m. to 4:40 p.m. or 2:00 a.m. to 10:40 a.m. EST.
- United Kingdom: the London Stock Exchange considers itself the world’s most international stock exchange, with over 3,000 listings and a market capitalization of $ 3.2 trillion. It operates locally from 8:00 a.m. to 4:30 p.m. or 3:00 a.m. to 11:30 a.m. EST.
It is possible to invest through foreign exchanges by setting up an international account with most major brokerage firms, but individuals should consider the intricacies of foreign currency exchange, as well as the tax implications of global trade before proceeding. opt for this route.
What is extended hours trading?
Extended trading occurs when the market closes and an investor buys or sells a security outside of normal trading hours.
Extended hours trading is conducted via electronic communications networks and includes both before and after hours trading. However, the volume of these transactions is limited because there are fewer participants.
Investors typically seek to trade after hours when important information, such as a earnings release, prompts them to buy or sell, but occurs after the exchange has closed or before it opens.
After hours trading can be a strong indicator of the direction in which the market is going to open, and it should be noted that most extended hours trades take place near normal trading hours, as the relevant news is. generally published just before the market opens or shortly thereafter. To close.
The three trading sessions
- Pre-marketing: Operates from 4:00 a.m. at the open market to 9:30 a.m. EST.
- Normal market hours: Runs from 9:30 a.m. to 4 p.m.
- After hours: Starts at 4:00 p.m. and can run until 8:00 p.m. EST, but trading volume tends to slow down considerably around 6:00 p.m.
Risks associated with extended trading
While extensive trading allows investors to act quickly and beat the rest of the market, there are some risks to be aware of.
- Less liquidity: Extended trading hours have lower trading volume than traditional hours, and some stocks cannot be traded outside of traditional hours at all. This makes it more difficult to execute trades and leads to a decrease in liquidity.
- Higher volatility: Due to declining trading volume, trading for extended hours is often accompanied by larger spreads or differences between the bid and ask price of a stock. This can make it more difficult for investors to trade at the desired price and can facilitate drastic price movements.
- Price uncertainty: In the same vein as above, high volatility makes it harder to predict a stock’s price outside of traditional trading hours, and a stock’s price for extended hours does not always closely match its price. during normal trading hours.
Where there is risk, there is room for reward. The main advantage of trading outside of normal hours is that it allows investors to react to news, such as low profits, immediately after their announcement rather than having to wait for a stock exchange to open, when the price dies. ‘a stock may already have fallen considerably.
The major US exchanges, the NYSE and the Nasdaq, are open 9:30 a.m. to 4 p.m. on weekdays, but individuals can also trade outside of these hours. Extended trading hours allow investors to act quickly after news that could affect a stock’s price.
Trading beyond normal hours can be risky, as stocks are less liquid and more volatile, but can also be worth it.
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