When and why the stock market closes

In 1987, trading on the Nasdaq stock exchange was stopped by… a squirrel!

A common squirrel accidentally damaged the power grid in Trumbull, Connecticut, interrupting the Nasdaq automated quotes system for an entire 82 minutes. 

Normally, though, the operating schedule of stock exchanges, even online, is tied to the operation hours of offline exchanges. That’s why traders sometimes have to deal with site unavailability and asset prices freezing up – rates aren’t updated during downtime. In most cases, traders and investors are used to these breaks, and some even actively use them in their work. 

How stock exchanges work

How millennials invest: stocks, savings and a bit of psychology

In each region, exchanges work according to their own schedule, depending on the time zone and the rules of the country.

Stock markets are typically open from Monday to Friday, with Saturday and Sunday as days off. In Asia, there is also a lunch break. Also, exchanges don’t work on national holidays, memorial and mourning dates, specific to each country:

  • Asian sessions close for Lunar New Year;
  • European exchanges are closed on Christmas and Boxing Day;
  • There’s no trading in the USA on Black Friday;
  • European and Japanese exchanges close early on New Year’s Eve for a short holiday.
  • Additional days off may be added by state decrees in connection with major events in the country or region.

Trading session schedule

The trading session is the time of the physical work of the exchange. But in practice, auctions are held both before the opening and after.

In addition to the local schedule of each specific exchange, there are four general trading sessions: 

  • Pacific – 9 pm to 6 am (UTC);
  • Asian – 12 am to 9 am (UTC);
  • European – 7 am to 4 pm (UTC);
  • American – 1 pm to 10 pm (UTC).
How to create an investment plan

Session operation hours do overlap. The trading robot closes orders on one exchange and instantly opens them on another. This is one of the things that helps to avoid sharp jumps. In addition to the actual session hours, there are the pre-market and post-market periods. All orders collected during these periods fall into the Depth of Market, where orders that match the buy and sell prices are executed.

The need for premarket trading is explained by the typical trading chaos within the first minutes of the exchange opening. If there were news or reports during the night or during the weekend for any issuer that disappointed the investors, the beginning of the trading session will create a major burden on the exchange from the piled-up sales orders. In order to clear out these orders, reducing the load on the data center, some of them are completed during premarket trading, and the rest are transferred to the main session time. If you’d like to know when the stock market closes, it’s easiest to refer to our table above.

Test your trading power!
Take our quiz to check your knowledge of trading. If you are new to the Binomo platform – get the bonus after completing it!
Take a quiz

Emergency trading halt – why is it necessary 

Stopping trading immediately after the opening or in the middle of the working day is a kind of a circuit breaker is supposed to save the market from chaos. This measure is used rarely, since it is a reason for panic in itself. The decision is not made spontaneously, there is a prescribed algorithm for most platforms. The halt occurs automatically, and does not require human intervention.

Go
Press Go and let the wheel choose your article of the day!
10 interesting facts about financial markets in 21st century

This measure was initially put in place was after the 23% crash of the Dow Jones in October 1987. More detailed rules were developed after the instant crash on the NYSE in May 2010 (Flash Crash). The exchange adopted the latest version of the rules in February 2013. It’s a three-tier system, and if the S&P 500 index falls by 7%, 13% or 20%, respectively, trading stops for 15 minutes. If the third threshold is exceeded, trading will stop until the end of the day.

A similar mechanism exists on every exchange in the world. Securities price fluctuations are considered significant after a 7-10% drop, which is where these measures begin to be implemented.

The option of manual trading suspension is reserved by all exchanges – this extreme measure is prescribed in the US securities law and in the statutory documents of the Securities and Exchange Commission (SEC). Officially, this is done to protect the interests of investors. The longest trading halt in US history occurred on September 11-17, 2001. The cause was the notorious terrorist attack. In the very first minutes after the release of the news, all indices fell by more than 10%, but the decision to close the exchange was made by the administration. This helped to avoid a massive dumping of assets and allowed the market to stay afloat.

In any case, the circuit breaker mechanisms are used regularly, if not often. They are an emergency method for the exchanges to keep operating, and not necessarily a sign of financial disaster.

+2 Like
Share
Copy link
Link copied
RELATED ARTICLES
8 min
What is hyperinflation?
5 min
Is trading a fraud?
4 min
Thematic vs derivative investing — a detailed analysis 2022
4 min
Physical capital
4 min
The Elliot wave theory of currency flow: What every trader must know
5 min
Mechanics of the financial market

Open this page in another app?

Cancel Open