Stock Market Hours and NYSE Holidays
The normal stock market hours for the two primary U.S. stock exchanges – the New York Stock Exchange (NYSE) and the NASDAQ Stock Market (NASDAQ) – are from 9:30 A.M. to 4 P.M., Eastern time, Monday through Friday.
Both stock exchanges are completely closed throughout the weekend.
In addition to the regular trading hours, both stock exchanges offer pre-market and after hours trading.
Pre market trading occurs from 4 A.M. to 9:30 A.M. on the NASDAQ exchange and the NYSE Arca exchange, the all-electronic leading exchange-traded funds (ETFs) exchange.
Both the NYSE and NASDAQ offer after hours trading from 4 P.M. to 8 P.M., Eastern time.
The normal bond market trading hours on the NYSE are 8 A.M. to 5 P.M., Eastern time, Monday through Friday. Early trading is from 4 A.M. to 8 A.M., and after hours trading extends from 5 P.M. to 8 P.M. As with stocks, there is no U.S. bond market trading at any time during the weekend.
See Also: Best Time of Day to Buy Stocks
U.S. Stock Market Holidays – New York Stock Exchange and NASDAQ
Normally, the only exceptions to the regular trading hours on U.S. stock exchanges are designated federal holidays, which are nearly always also bank holidays.
The following is the list of market holidays currently observed by both the New York Stock Exchange and the NASDAQ Stock Market:
|January||New Year’s Day, Martin Luther King, Jr. Day|
|June||Juneteenth (new holiday just added in 2021)|
In addition, the markets close early – at 1 P.M. – on the Friday after Thanksgiving.
The actual dates that holidays are observed change slightly from year to year. For example, when a holiday such as Christmas falls on a weekend, the official observance of the holiday – and the day that the stock exchanges will be closed – will occur on either the preceding Friday or, more commonly, on the following Monday.
Pre-market and After Hours Trading
Pre-market and after hours trading has been possible for large institutional traders and high net worth individuals for quite some time but has only become widely available to individual retail investors in the last 30 years or so.
The reason for this is two-fold. One, the technological advances in electronic trading have made trading outside regular market hours easier. Two, the increase in international investing has made the practice more desirable.
All pre-market trading and after hours trading is conducted through digital electronic communications networks (ECNs) such as the NYSE Arca. The difference with extended hours trading is that, rather than having your order dispatched to an exchange, it’s an ECN that attempts to match a corresponding buy or sell order with your order. Most brokerage firms require you to accept the Electronic Communications Network Users Agreement before you can place orders during extended hours trading.
Also, some brokers charge extra fees for handling pre-market or after hours orders. It’s a good idea to check to see if your brokerage firm charges such fees. If it does, check the fee amount.
Although pre-market trading on U.S. stock exchanges is available starting at 4 A.M., the bulk of pre-market trading typically occurs between 8 A.M. and the open of regular trading at 9:30 A.M.
How to Place Trades During Extended Hours
The process for placing a trade during either the pre-market or after hours trading session is the same as the procedure for placing a trade during regular trading hours. Log into your trading account, select the stock you want to buy or sell, and place your order. The main difference lies in how your order is executed – using an ECN.
Note: All orders placed during extended hours sessions must usually be limit orders. Market orders during the extra sessions are not allowed by most brokerage firms. You would probably not want to use a market order during pre-market or after hours trading anyway because of the significantly wider bid-ask spreads and increased volatility.
Advantages of Trading Outside of Regular Stock Market Hours
The primary advantage offered by both pre-market and after hours trading is that it enables investors to adjust their stock market portfolio in reaction to events or news that occur outside of regular trading hours. Incidents that commonly move the market outside of normal trading hours include releases of company earnings reports, court decisions, and events overseas.
Even significant changes in market analysts’ ratings of a stock can move the market in after hours trading. Investors may be able to obtain better buy or sell prices before the stock markets next open for regular retail trading.
For example, if you are holding a substantial long position in a stock when very unfavorable news for the company comes out – such as a much lower than expected earnings report – you may be able to minimize any loss by exiting your position before the next regular trading session.
Some day traders may buy or sell short a stock during pre-market for day trading purposes, when they believe they will be able to quickly close their trade for a profit once the regular daily trading session opens.
Institutions use dark pools and execute trades outside the regular exchanges, and retail investors often don’t have access to brokers that allow trading outside the regular trading hours. Therefore, retail and institutional investors do little pre-market or after hours trading, but may still keep an eye on the trading that occurs during the extended hours sessions to get early clues regarding likely upcoming market action during the next regular trading session.
Risks of After Hours Trading
There are significant risks involved with after hours trading, beyond the risks that exist with trading stocks on a stock exchange during normal trading day hours. All the additional risks stem from the nature of the trading that occurs during early trading or late trading.
First, there is the risk that your order may not be filled. Different brokerage firms use different ECNs to handle after hours trading. Typically, each broker only uses one of the multiple ECNs that are available. While there may be a match to your order (a sell order whose price matches your buy order, or a buy order whose price matches your sell order) somewhere on another ECN, there may not be a match available on the ECN your particular brokerage firm uses.
What this means in practical trading terms is that unlike trading during normal trading hours, you may not be able to get the best available buy or sell price. In order to ensure getting your order filled, you may have to accept a less desirable price.
See Also: Stock Order Types
The same potential risks – either not getting your order filled at all, a partial fill only, or having to accept a less favorable price – also exist because of the extremely low volume of trading that commonly occurs during the pre-market and after hours sessions. The number of traders active during the extended hours trading sessions is only a fraction of the number active during normal stock market trading hours. Low volume means low liquidity, which means significantly wider bid and ask spreads.
See Also: Bid Ask Spread
Pre-market and after hours trading is typically much more volatile than the trading during regular trading hours. This is partly due to the substantially lower volume of trading already mentioned.
Also, there is no limit up or limit down rule outside the regular trading hours.
Volatility may also be significantly increased by relevant news that breaks during extended trading hours. Different traders may interpret the news differently, some seeing it as bullish while others see it as bearish. As a result, the price of a stock may fluctuate wildly before there is a market consensus that settles on a new price level. While a stock’s price is making dramatic up and down moves, it can be extremely difficult for you to decide on a price to specify with a limit order.
See Also: Most Volatile Stocks
Is Trading Outside The Regular Market Hours a Good Idea?
You need to be aware that, as an individual retail trader, you’re trading primarily against professional institutional traders who may have access to much better news sources than those you can access. Stock price trends that appear during after hours or pre-market trading are frequently deceptive. You may be lured into buying a stock that you see steadily rising in price during pre-market trading, only to see the price fall dramatically immediately after the opening bell for the regular trading session.
Your brokerage firm and the ECN it uses may have additional specific rules for pre-market and after hours trading, so be sure to check about this with your broker. If you have stock trading accounts with more than one broker, it’s a good idea to compare their respective restrictions. For example, different brokers and ECNs have varying rules about time limits on orders placed after hours or pre-market.
Your order may expire or be cancelled if it isn’t filled by the end of the extended hours trading session. Alternatively, it may remain active when the regular trading session begins. In either case, you certainly want to be aware of how your order will be handled.
You should also check with your broker to see if orders you place that are not filled during normal trading hours remain active during the after-hours market or will only be active again during the next regular trading day.
Additionally, some brokerages only allow after hours trading during part of the after hours sessions available through the exchanges. For example, your broker may only enable after hours trading from 4 P.M. to 5 P.M.
Pre-market or after hours trading may present additional opportunities for you to either increase profits or minimize potential losses. However, it carries significant additional risks and can be especially dangerous for inexperienced investors. Before engaging in after hours trading, be sure to check with your broker regarding rules and extra fees that may apply.
Regardless of whether you choose to actively trade during extended hours, you may well want to monitor the trading that occurs then, as it may provide valuable clues as to what market action may be like during the next regular trading session.
An alternative to trading the U.S. stock exchanges after hours is trading on a foreign exchange that has different regular trading hours. For example, if you want to buy a stock that is also traded on the London Stock Exchange (LSE), then you may be able to get a more favorable price there, as opposed to purchasing the stock pre-market in the U.S.
Can you buy or sell stocks outside of the regular trading session?
Yes. Both the NYSE and NASDAQ offer after hours and pre-market trading outside the regular trading session.
What are the hours for the after hours trading session?
After hours trading is from 4 P.M. to 8 P.M, Eastern time on the New York Stock Exchange and Nasdaq.