Trading Hours in the US Stock Market

Knowing when the stock market operates helps you plan trades, understand after-hours news reactions, and avoid costly timing mistakes. [DEFINITION] Regular Trading Hours (RTH): The primary session when U.S. stock exchanges are open—9:30 AM to 4:00 PM Eastern Time, Monday through Friday. ### The Trading Day Structure **Pre-Market Session: 4:00 AM - 9:30 AM ET** - Lower volume, less liquidity - Wider bid-ask spreads - Reacts to overnight news, international markets - Earnings released here often cause gaps at open **Regular Market Hours: 9:30 AM - 4:00 PM ET** - Highest volume and liquidity - Tightest bid-ask spreads - Best prices for most investors - Where institutional money moves **After-Hours Session: 4:00 PM - 8:00 PM ET** - Similar to pre-market: lower volume - Earnings often released here - Prices can swing dramatically on news [TIP] Unless you have a specific reason to trade in extended hours (like reacting to earnings), stick to regular market hours. You'll get better prices and faster execution. ### 2024-2025 Market Holidays The market closes on these days: - New Year's Day - Martin Luther King Jr. Day - Presidents' Day - Good Friday - Memorial Day - Juneteenth - Independence Day - Labor Day - Thanksgiving Day - Christmas Day **Early Closes (1:00 PM ET):** - Day before Independence Day (sometimes) - Day after Thanksgiving (Black Friday) - Christmas Eve (when on weekday) [EXAMPLE] You hear Apple announced incredible earnings at 4:30 PM ET (after close). The stock jumps 8% in after-hours trading. By the time regular trading opens at 9:30 AM, the price may have already "gapped up." You missed the initial surge. ### Understanding the Opening and Closing Auctions **The Open (9:30 AM):** - Orders accumulated overnight are matched - Can see significant volatility in first 15 minutes - Called the "opening auction" **The Close (4:00 PM):** - Largest volume typically occurs here - Mutual funds and ETFs rebalance - Closing price is the "official" price for the day [KEY] The first and last 30 minutes of trading see the highest volume and often the most volatility. Many professionals avoid trading during these periods unless they have specific strategies. ### Extended Hours: Proceed with Caution **Risks of Extended Hours Trading:** - Lower liquidity = worse prices - Wider spreads = higher costs - More volatility = bigger price swings - Limited order types (usually limit orders only) - Not all stocks trade in extended hours [WARNING] A stock might drop 5% in after-hours trading on news, then recover by the open as cooler heads prevail. Avoid panic-selling or panic-buying in extended hours unless you have a clear strategy. [EXERCISE] It's 6:00 PM ET on Tuesday. Can you trade Apple stock right now? If so, under what conditions? |ANSWER| Yes, you can trade in the after-hours session (4:00-8:00 PM ET). However, you'll likely need to use a limit order, face wider spreads, and have your broker explicitly enable extended hours trading. [SCENARIO] You place a market order to buy 1,000 shares of a small-cap stock at 4:15 PM in after-hours trading. The bid-ask spread during regular hours was $0.05, but in after-hours it's $0.50. Your trade executes $0.50 higher than expected, costing you an extra $500. Lesson: Always use limit orders in extended hours trading.