Stock market is considered a real market where traders come to meet on the floor of stock exchange. They actually come on each business day to match-up the buying and selling orders and they perform this activity under a system that is known as an “Open Outcry”. This is a system that needs the real people. Stock markets have their own working hours. They get opened and closed at specified times each day. But now the electronic systems are available that allow the certain trading 24 hours a day but the most of the trade occurs during the normal stock market open hours.
All the stock exchanges work during some specified working hours. If we talk about New York stock exchange then we come to know that it opens at 9.30 a.m. and it remains unclosed from Monday to Friday. A bell is utilized to let the people know that the trading day had started and the open outcry system also goes into effect. When the closing time comes, the bell rings again to stop the trading. If we look at NYSE, it gets closed at 4 p.m. EST, so after it all the open outcry trading ends too. Many markets in U.S exercise the same trading times and they remain closed on national holidays.
Opening prices of stock are used for many reasons. They serve for technical analysis of different stock prices, for stock indexes as a part of an average and they are utilized for the different mathematical calculations that have connection with price changing and instability. It often happens that the opening price of a stock does not remain same and its closing price gets changed. It occurs because trading is a dynamic process that is controlled by demand and supply. Even overnight, the shareholders process the company information and economic and political news that can affect the element of supply and demand for stocks on the very next morning.
A stock trade often gets executed when a market opens. You might enter a trade order like a buy or sell request even after the market is closed and your transaction or order will be accomplished when the market will open the very next day. But this all depends on your investment manager or brokerage firm. Such trading involves some risk like you cannot predict that how the overnight changes will affect the prices of share on the very next day.
After hours trading:
After hours trading is not similar to entering an order after the closing of a market. This after hour trading facility is restricted to some firms and institutional clients. These traders work with the help of an electronic communication network to place orders to other traders. In this trading, traders are necessarily blind and the element of volatility is low. Little volatility means that the prices seem to be less favorable when they are compared during the regular market hours. So, this is how share market works internationally.