A trading session is a period of time that matches the primary daytime trading hours for a given locale. This phrase will refer to different hours, depending on the markets and locations being discussed. Generally a single day of business in the local financial market, from that market’s opening bell to its closing bell, is the trading session that the individual investor or trader will reference.
The markets for forex, futures, stocks, and bonds all have different characteristics that define their respective trading sessions for a given day, and the primary trading hours naturally differ from one country to another due to contrasting time zones.
Key Takeaways
A trading session is the primary trading hours and locale for a given asset class.
Regular trading in U.S. stocks has a clearly defined trading session from 9:30 a.m. to 4:00 p.m. EasternTime (ET) on weekdays.
The working hours of the NYSE also mark the most active period for trading within a 24-hour time period.
Different markets may each have their own working hours, with foreign exchanges encompassing many overlapping sessions across different world time zones.
Trading session hours can vary by asset class and country. The regular trading session for U.S. stocks starts at 9:30 a.m. and ends at 4:00 p.m. EasternTime (ET) on weekdays (holidays excepted). These times are primarily driven by the working hours of the New York Stock Exchange (NYSE), which closes early at 1:00 p.m. ETon several occasions throughout the year associated with holidays.
The regular weekday trading session for the U.S. bond market is 8:00 a.m. to 5:00 p.m. ET. Futures markets, meanwhile, have different trading hours, depending upon the exchange and the type of commodity being traded.
Traders should be aware of trading session hours for any securities and derivatives that they’re interested in trading beforehand to prevent any unexpected problems from arising.
In addition to regular trading hours, some markets may have pre-market or after-hours trading sessions. Other markets even have 24-hour trading sessions.
Pre-Market and After-Hours Trading Sessions
Pre-market trading for U.S. stocks occurs between 4:00 a.m. and 9:30 a.m. ET on weekdays. After-hours trading, on the other hand, is from 4:00 p.m. to 8:00 p.m. ET on weekdays, although these times may vary slightly by exchange.
Pre-market and after-hours trading is a compelling way to capitalize on important news announcements or other factors that occur outside of regular trading hours. With that in mind, here are a number of factors that investors should be mindful of when trading outside of regular hours. In particular, the Securities and Exchange Commission (SEC) notes eight such risk factors:
Inability To See or Act on Quotes: Some brokers only allow investors to view quotes from their own trading system rather than other electronic communication networks (ECNs).
Lack of Liquidity: There are fewer traders involved with after-hours trading, so there’s typically a lot less liquidity than during regular trading sessions.
Larger Quote Spreads:Less trading activity often translates to wider bid-ask spreads, which could make order execution difficult.
Price Volatility:There may be greater fluctuations than during regular hours, particularly if there’s a breaking news story with significant market repercussions.
Uncertain Prices: The price of stocks traded after-hours may differ from those traded during regular trading sessions.
Bias Toward Limit Orders: Many ECNs only accept limit orders rather than market orders during after-hours sessions.
Competition with Professional Traders:Many after-hours traders are professionals with large institutions that have access to more information.
Computer Delays: There is less technical support available during pre-market or after-hours trading sessions, so you could encounter trade execution delays.
24-Hour Trading Sessions
There are some markets with a 24-hour trading session. Among the most notable is the global foreign exchange (forex) market, in which currencies are traded. The forex market is the largest, most liquid market in the world.
Unlike the equity market, the forex market has no physical exchange. Rather, it consists of a number of large banks and brokerage firms that trade currencies with themselves. The forex market is open 24 hours a day, five days per week, from Sunday evening until Friday night.
Regular Trading Sessions Around the World
Below are the 20 largest stock exchanges on Earth by market cap, which have been further grouped by continent.
Pre-market trading happens before the market opens. While hours may vary between brokerage firms, they can extend as early as 4 am and run until the opening bell rings at 9:30 am. After-hours trading occurs once the market closes and typically runs from 4 pm to 8 pm.
After-hours trading commonly helps indicate the next day's open. Extended-hours trading in stocks takes place on electronic markets known as ECNs before the financial markets open for the day, as well as after they close. This activity can help investors predict the open market direction.
Some traders follow something called the "10 a.m. rule." The stock market opens for trading at 9:30 a.m., and the time between 9:30 a.m. and 10 a.m. often has significant trading volume. Traders that follow the 10 a.m. rule think a stock's price trajectory is relatively set for the day by the end of that half-hour.
Some of the common indicators that predict stock prices include Moving Averages, Relative Strength Index (RSI), Bollinger Bands, and MACD (Moving Average Convergence Divergence). These indicators help traders and investors gauge trends, momentum, and potential reversal points in stock prices.
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The LSTM algorithm has the ability to store historical information and is widely used in stock price prediction (Heaton et al. 2016). For stock price prediction, LSTM network performance has been greatly appreciated when combined with NLP, which uses news text data as input to predict price trends.
With all these factors taken into consideration, the best time of day to trade is 9:30 to 10:30 am. The stock market opens for trading at 9:15 AM and in the first 15 minutes, the market is still responding to the previous day's news with experienced traders waiting to make their move.
The stock market is most active between the hours of 9:30 AM EST to 10:30 AM EST. The 2nd most active time is called Power Hour, which is between 3:00 PM EST to 4 PM EST.
These timings are also the same whether you want to trade on any of the two major stock exchanges in India, namely the BSE and the NSE. The regular market trading hours are from 09:15 AM and close at 03:30 PM. There's a pre-opening session before 09:15 AM and a post-closing session after 03:30 PM.
The U.S./London markets overlap (8 a.m. to noon EST) has the heaviest volume of trading and is best for trading opportunities. The Sydney/Tokyo markets overlap (2 a.m. to 4 a.m.) is not as volatile as the U.S./London overlap, but it still offers opportunities.
The opening period (9:30 a.m. to 10:30 a.m. Eastern Time) is often one of the best hours of the day for day trading, offering the biggest moves in the shortest amount of time. A lot of professional day traders stop trading around 11:30 a.m. because that is when volatility and volume tend to taper off.
A 4 hour forex trading strategy is a trading method that focuses on using the 4-hour timeframe to analyze the market and make trading decisions. It is a popular approach among traders who prefer a longer time frame but still want to take advantage of short-term price movements.
These timings are also the same whether you want to trade on any of the two major stock exchanges in India, namely the BSE and the NSE. The regular market trading hours are from 09:15 AM and close at 03:30 PM. There's a pre-opening session before 09:15 AM and a post-closing session after 03:30 PM.
The U.S. stock market is generally open Monday–Friday during the hours of: Eastern time: 9:30 AM – 4 PM. Central time: 8:30 AM – 3 PM. Mountain time: 7:30 AM – 2 PM.
An open market is an economic system with no trade barriers to free market activities. In an open market, buyers and sellers can do business freely without common market barriers, such as unfair licensing agreements, arbitrary taxes, unionization, subsidies, and other regulations that affect regular market operations.
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