Close of a Trading Day
The close of a trading day indicates the end of the official designated trading time in an exchange. The New York Stock Exchange (NYSE) close is iconically signaled by ringing a bell on the trading floor, and is a popular example when describing a market trading session close. Different exchanges have different hours of trading sessions depending on the location and type of market. Stock trading on the NYSE is open from 9:30 AM to 4:00 PM local time in the eastern United States from Monday through Friday, with bond trading open from 8:00 AM to 5:00 PM. Each exchange is closed for specific market holidays such as New Year’s Day, and information about closures can be found on their website.
There are pre-market and after-hours trading that exist in most markets as well. In the NYSE, post-market trading closes at 8:00 PM. As a rule of thumb, it is generally recommended that traders do not place orders in the final hours of market trading sessions unless they have sufficient experience and knowledge. Trading in after-hours means that there is less activity in the market, so there will be less liquidity as a result, resulting in higher bid-ask spreads and more volatile prices. In addition, since the next day’s trading session is completely different from today’s, there is a risk that macroeconomic events can occur in between, resulting in price changes. This means that there is no guarantee that the market will open at the prices set during after-hours, and this can potentially result in losses in traders. If you are starting out trading, it may be more difficult to trade after-hours because you will be competing for the best price with traders working for hedge funds or investment banks.