As someone who is just getting started in the stock market, you might find yourself confused by some of the terms you see. You might wonder what market hours are, and how they work into investing world. You’re not alone; the investing world can be confusing to understand when you start off with your first investments! Here’s a quick explanation of market hours and how they work in the investing world.
The Basics
Every day, different markets trade at different times. While most industries open during normal business hours (9 a.m.–5 p.m.), for example, New York Stock Exchange-listed stocks trade only between 9:30 a.m. and 4 p.m., Monday through Friday (except holidays). This difference is called market hours, or trading hours; each market has its own specific market hour schedule that should be taken into account before you make any trades or invest any money.
The Electronic Communication Networks (ECN)
An ECN, or electronic communication network, is an interdealer network that dealers use to transact with one another directly and electronically. (ECNs provide a mechanism for direct access by investors to those markets.) The three largest ECNs are Instinet, Archipelago, and Island. It’s important to note that most exchanges offer their own proprietary ECNs. For example, NYSE Arca offers NYSE ArcaBook and BATS offers Direct Edge/BATS Book. In addition, many brokers have their own proprietary ECNs as well; Charles Schwab has SchwabTrades, Fidelity has Fidelity Liquidity Network (FLIN), TD Ameritrade has TDAmeritrade Network, etc.
The Day Session
The market is open from 9 a.m. to 4 p.m., Eastern Standard Time (EST). This is when most U.S.-based investors are working, so it’s also when traders tend to have more liquidity (in other words, it’s easier to get your order filled). There are also quite a few hours for trading after market close and before market open (generally referred to as overnight sessions).
The Afternoon Session
The New York Stock Exchange (NYSE) opens at 9 a.m. EST and closes at 4 p.m., but during those hours it doesn’t represent the entirety of trading activity. In fact, there are several other sessions on any given day, with different names depending on which exchange is involved.
The Night Session
The market opens for business at 9 a.m. ET on weekdays, so if you’re an American trader, that’s when all trading activity begins. The second session of each day (from 4 p.m. to 8 p.m.) is known as the night session, while trades between 8 p.m. and 4 a.m.
