Stock market trading hours
A stock market exchange is an open market where stocks are traded during specific hours on business days. Opening and closing times for stock market exchange varies from country to country, typically closing in the evenings. In this article, we will explore some of the top stock exchanges in the world by market capitalisation.
There are 60 major stock exchanges around the world, ranging in size and trading volume from well-known stock exchanges such as the New York Stock Exchange to small local exchanges.
Top stock exchanges around the world:
The New York Stock Exchange (NYSE)
Located on Wall Street in New York City, the NYSE is one of the largest stock exchanges in the world by market capitalisation ever since the end of World War 1 where it outpaced the London Stock Exchange. With a market capitalisation of over $20 trillion, the NYSE is almost 40% of the total world stock market value. Over 2400 companies are listed on the NYSE which represents sectors such as finance, healthcare, customer goods and energy. These are primarily United States-based companies and trade in the US dollar. The NYSE has normal trading hours from 9:30 am to 16:00 pm local time unless there is an early close due to a holiday.
National Association of Securities Dealers Automated Quotations (NASDAQ)
The NASDAQ stock exchange is also based in New York located in Times Square. NASDAQserves as a global electronic marketplace for securities trading. This stock exchange has always adapted a computer and telephone-based system of trading making it the first electronic stock exchange. This is the second-largest stock exchange reaching $11 trillion and has the largest market capitalization in technology stocks. Some of NASDAQ’s stop listed companies include Apple, Microsoft, Facebook and Tesla. The NASDAQ stock exchange normal trading hours are from 9:30 am-16:00 pm local time; however they run pre-market trading hours from 4:00 am to 9:30 am and after trading hours which extends from 4 pm-8 pm.
Tokyo Stock Exchange (TSE)
Tokyo Stock exchange is the largest stock exchange in Japan with a market capitalisation over $5 trillion. The Japan exchange group was formed in 2013 when there was an emergence between Osaka Securities Stock Exchange and TSE. TSE also has partnered with other exchanges around the world including the London Stock Exchange and has over 3500 listed companies. These include top companies such as Honda Motor Co, Toyota Motor Corp and Sony Corp. Japan’s Tokyo Stock Exchange trading hours are different from the other exchanges discussed as it has a daily hour closure for lunch break. Trading hours are from 9:00 am until 15:00pm and lunch break is from 11:30 -12:30 pm.
Shanghai Stock Exchange, China (SSE)
The Shanghai Stock Exchange is one of three independent stock exchanges in China and is the largest. The other two stock exchanges are Hong Kong and Shenzhen. Shanghai Stock Exchange is the fourth largest stock exchange in the world where its history dates back to 1866 but it was suspended following the Chinese revolution in 1949. The Shanghai Stock Exchange was then founded in 1990 and now has a market capitalisation of over $4trillion. Stocks listed at SSE have ‘A’ shares which trade in local currency and ‘B’ shares which is priced at the US dollar for foreign investors. SSE opens at 9:30 am local time and closes at 3 pm with a lunch break from 11:30 am- 1:00 pm.
London Stock Exchange (LSE)
London Stock Exchange is the primary stock exchange of the U.K and the largest in Europe. The history goes as far back as the 1700’s where services were no more than paper publications of market prices twice a week. This makes it one of the oldest stock exchanges in the world. The London Stock Exchange used to be the largest stock exchange in the world until the First World War when it lost its title to the New York Stock Exchange. In 2007 the LSE merged with the Milan stock exchange, Borsa Italiana forming the London exchange Group. With a market capitalization of over $4 trillion, it is the most international stock exchange with over 3000 companies among 70 countries. Trading hours is from 8:00am- 16:30pm
Toronto Stock Exchange (TSX)
Toronto Stock Exchange is the largest stock exchange in Canada with over 1500 listed companies. Toronto stock exchange merged with Montreal Stock Exchange in 2009 and was renamed from the TSX group to TMX group with a market capitalisation over $ 2.2 trillion. This makes it the ninth-largest stock exchange in the world. Canada’s Toronto Stock Exchange opens at 9:30 am and closes at 4 pm America/Toronto time zone with no break for lunch included.
Can I buy stocks outside of market hours?
In the past decade, extended trading has become increasingly popular due to the electronic communications network becoming more widely available and investors embracing this. In fact, a number of brokers now provide after-hours trading services for all their investors.
Pre-market and post-market trading
What some new traders may not know is that the stock market is also open before and after normal trading hours. The pre-market allows investors to trade stocks between the hours of 4 am and 9:30 am. Post-market trading can take place between 4 pm to 8 pm.
How do stock prices change after hours?
After-hours trading is the timeframe after the market closes where an investor can buy and sell outside normal trading hours. Post-market trading typically takes place between 4 pm and 8 pm while pre-market trading sessions end at 9:30 am. Before the 1990s, after-hours trading was reserved for institutional investors where the average trader could only trade during normal trading times. Fortunately, today’s market is more open than ever giving individuals the freedom to trade during the extended hours. This wouldn’t have been possible without electronic communication networks which match potential buyers and sellers without a traditional stock exchange. Trading after hours is seen as convenient as it allows investors to react immediately to breaking news however risks are also associated. After hour trading comes with less liquidity, there is more competition from institutional investors and more exposure to volatility which can impact dramatically the price you end up receiving for your shares. In general price changes in the after-hour trades have the same effect on a stock as to how changes in the regular market do. So a $1 or increase in the regular market is the same as a $1 increase during after-hours trading. That being said you can make gains off of trading during after hours if there is an increase in your stock price. However, it is important to note that once the regular market opens for the next day trading, the stock may not be open at the same price it was being traded for in after hours. Price change in the after-hours are much more volatile than regular hours prices so they shouldn’t be used as a reliable reflection of what a stock will trade for once the regular market opens. Instead, it is useful in the sense that it reveals how the market reacts to new information released after the regular market has closed.
Pros and cons to after-hours trading
- Flexibility: Some investors may prefer to trade at off-peak times. The after-hours trading market provides that additional option creating flexibility.
- Trading with new information: After-hours trading gives you the opportunity to act quickly to breaking news stories or new information before the next day’s market opens.
- Pricing opportunities: Despite the risk of volatility present in the after- hours trading market, it is still possible to find prices you find appealing and make profits. It is just important to approach with caution and do your research!
- Less liquidity: During regular trading hours, there are plenty more buyers and sellers so trading after hours means there may be less trading volume for your stock. This makes it difficult to exchange your shares to cash.
- More competition from institutional investors: Although individual investors now have the freedom to trade in the after-hours market the fact of the matter is that they must compete against large institutional investors who have the advantage of having access to more resources. Large investors also interact with anonymously, which gives them hidden agendas.
- Volatility: After-hours trading is used less in comparison to normal trading hours which means that you are more likely to experience harsh price fluctuations which can have a huge impact on the price you end up receiving for your shares. With that being said it is important to use a limit order on any shares you buy or sell outside of normal trading hours. A limit order allows you to set a minimum or maximum price which you are willing to buy or sell. This gives traders more control especially when fearful of using the market throughout periods of heightened volatility.
To conclude after-hours trading can provide benefits to traders trying to profit on new information or allow the ability to buy or sell stocks if unexpected news is announced. However, regularly practising after-hours trading is not usually recommended for traders as the risks discussed throughout this article is associated. Normal trading hours offers efficient markets and better liquidity which makes all prices fair value.