As the amount of stock trading has increased, and as the amount of international and domestic traders has increased, the hours of operation for the US stock market have evolved. With the acquisition of Electronic Communication Networks, offering stock trading after-hours, the official closing time of the stock market has changed.
The stock market in the US can be understood to mean the NYSE (the New York Stock Exchange). The New York Stock Exchange, located at 11 Wall Street in New York City, is the world’s largest stock exchange by market capitalization. The market capitalization of the NYSE’s listed companies is at $13.39 trillion as of late 2010.
The New York Stock Exchange’s operational hours affect all of the exchanges in the United States in light of the large amount of trades executed on this exchange, as well as the reality that many stocks are traded across several exchanges.
Historical Hours Of Operation
The New York Stock Exchange opened at 10am in 1871, and the closing time ranged from 2pm to 4pm Mondays through Saturdays. These hours have evolved over time. The NYSE’s operational hours were set at 9:30am to 4pm Eastern time in 1985. The New York Stock Exchange also stopped Saturday trading at this time.
Two additional trading sessions were added in 1991, 4:14pm to 5pm, and 4pm to 5:15pm. The New York Stock Exchange amended its rules concerning trading after-hours to permit specialists to trade from their dealer books from 6:30pm to 15 minutes prior to the security reopening on the stock exchange.
After-hours trading is offered by the Electronic Communication Networks for a fixed charge to retail clients, brokerages, and institutions. Broker dealers are offered trading after-hours of cash equities from 4am to 9am Monday through Friday.
The Significance Of After-Hours Trading
Traditionally, traders and analysts utilized end-of-day trading data to make decisions regarding investments. Since trading now proceeds after the market is closed, overnight data needs to also be taken into consideration.
When investors abuse their ability to trade after-hours by placing trades when other investors are not able to do the same it leads to market timing issues. Investors who can take advantage of after-hours trading can potentially profit to the detriment of other investors.
Identification And Considerations
Electronic stock quotes of the cost of a security at the close of the previous trading day are accessible to the general public when the New York Stock Exchange is closed. This content is accompanied by a disclosure detailing the date of the stock’s closing price. An stock quoted online on a Saturday will state that the stock market is presently closed, and that the price of the stock is a quote from the prior Friday.
As the majority of the trades on the New York Stock Exchange are electronically and automatically completed, a large amount of trades can be prepared in a smaller time frame. As the request for trading increases, secondary trading venues develop.
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