Close: What it Means, How it Works, After Hours

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Updated January 21, 2022

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What Is the Close?

The close is a reference to the end of a trading session in the financial markets when the markets close for the day. The close can also refer to the process of exiting a trade or the final procedure in a financial transaction in which contract documents are signed and recorded.ꦫ

Key Takeaways

The close is simply the end of a trading session in the financial markets, however, closing times tend to vary between market and exchange.
Many markets also offer after-hours trading beyond the official close, although traders should exercise caution when transacting outside of traditional market hours.
Understanding the closing times of various markets is important to avoid making any costly mistakes.
Closing can also refer to closing out, or completing, a trade—or to the end of a deal or transaction, depending on the context.

Understanding the Close

Being aware of when markets open and close is essential for efficient trading, regardless of the exchange or type of security. Knowing when and how to clos♒e out a trade is also critical for market part♍icipants.

The most visible example of a market close is the close of the 澳洲幸运5官方开奖结果体彩网:New York Stock Exchange (NYSE) when the closing bell is rung, but closing times vary between markets and 澳洲幸运5官方开奖结果体彩网:exchanges.

Common Hours

NYSE equity trading hours are from 9:30 a.m. Eastern Time to 4:00 p.m. Eastern Time. 澳洲幸运5官方开奖结果体彩网:Pre-market hours begin at 6:30 a.m. Eastern Time, while 澳洲幸运5官方开奖结果体彩网:after-hours trading closes at 8:00 p.m. Eastern Time. The bond markets tend to be open a bit longer from 8:00 a.m. Eastern Time to 5:00 p.m. Eastern Time. Futures market hours vary widely based on the exchang🌳e and commodity—traders sho🔯uld see the exchanges’ websites for more details.

The most common market holidays include:

New Year’s Day
Martin Luther King Jr. Day
Washington’s Birthday
Good Friday
Memorial Day
Labor Day
Thanksgiving Day
Christmas

Closing Prices

The closing price is the price of the final trade before the close of the trading session. These prices are important because they are used to create traditional line stock charts, as well as when calculating 澳洲幸运5官方开奖结果体彩网:moving averages and other 澳洲幸运5官方开奖结果体彩网:technical indicators.

Since closing prices are widely followed, they may be manipulated by fraudulent traders to make the appearance of a rally. This practice, known as “high close” is especially prevalent with 澳洲幸运5官方开奖结果体彩网:micro-cap stocks that have limited liquidity since less dollar volume is needed to move the price🌃 higher.

Traders should be wary of using closing prices as a gauge of micro-cap and small-cap stock successes and look at 澳洲幸运5官方开奖结果体彩网:candlestick charts and other indicators for added insight.

After Hours

Many markets have after-hours trad🌸ing, which enables investors to place orders after the close of the trading session. While this may be tempting, there are several drawbacks that investors should consider before trading in after-hours sessions.

The primary drawbacks to consider include:

Limited Liquidity: Fewer traders are active in after-hours trading, which means that there’s less 澳洲幸运5官方开奖结果体彩网:liquidity, inefficient pricing, and higher 澳洲幸运5官方开奖结果体彩网:bid-ask spreads.
Professional Competition: Most after-hours traders are professional traders working for 澳洲幸运5官方开奖结果体彩网:hedge funds or investment banks, which makes it hard to compete.
No Guarantees: There is no guarantee that after-hours prices reflect a security’s opening price the next day since they are entirely different sessions.

Most traders should stay away from after-hours trading unless they have a lot of experience a♓nd a compelling reason to trade after the close.

Article Sources

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NYSE. "." Accessed Aug. 15, 2021.

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