What is the opening bell?
The opening bell refers to when a stock exchange opens for its normal daily trading session. The opening bell time and conditions differ from exchange to exchange. Since 1985, the New York Stock Exchange (NYSE) has used the opening bell to begin trading at 9:30 a.m. EST. At NYSE, there is a physical bell and an automatic bell that rings at the start of each trading day. On the Nasdaq stock exchange, where there is no physical trading room, the opening of the market is called the opening bell, but it is symbolic.
Key points to remember
- The opening bell represents the start of a regular trading session on a stock exchange.
- It is largely symbolic because the majority of exchanges are electronic and exchanges are rarely carried out on a physical floor.
- The opening bell gives an opportunity for exchanges to make the news and better market the securities during an initial public offering.
Understanding the opening bell
Physical floors have practically disappeared over the years with the rise of electronic commerce. Investors and traders use the term opening bell to describe the opening of a given market. The physical ringing of the opening bell has become a ceremonial event where dignitaries visiting stock markets or companies trading for the first day have the honor of ringing the bell.
This serves to draw attention to the day’s trading activities and helps maintain investor interest. For this reason, media companies such as CNBC, Fox and Cheddar have on-site facilities in the latest of the well-known official prosecution, the NYSE. Without these media companies having a place to report on the trading session, the stock market would be hard pressed to justify keeping the trading floor functioning, because there is so much automation anyway. As a result, the Nasdaq exchange, which has been electronic since its creation, has no physical trading room and has created a media space in order to present its opening ceremonies.
The first bell was actually a large gong used on the NYSE to officially inform brokers and dealers that it was okay to start the auction work. However, in 1903, the gong was replaced by an electronically controlled brass bell. The bell is accompanied by the hammer which is used in conjunction with the closing bell in recognition of 19e century stock calls. The opening and closing bell can be viewed daily on the New York Stock Exchange website.
Negotiate before the opening bell
Many stock exchanges offer pre-market operations before the opening bell. Meanwhile, traders and investors who have access to extended session trading can trade with each other. But there are no market specialists or market makers during these hours, and trading is done only with limit orders. Exchanges must therefore be exact matches in terms of size and duration of offer. This means that transactions made during these hours may take longer to complete and be less efficient in pricing. As a result, fewer traders participate in these sessions.
One notable exception concerns the circumstances surrounding the announcement of the results. If a company announces its quarterly results before the opening bell, an unusual wave of activity is likely to occur in this particular security. The additional participants all rushing to trade based on the new information mean that trading at these times can sometimes mimic the speed and efficiency of the price action that a regular session could provide. This wave of activity can also occur sporadically, according to information released overnight or before the opening bell.
While pre-market negotiation has its advantages, there are several important risk factors. Pre-market trading tends to have less liquidity than trading during normal business hours, which means that bid-ask spreads can be wider and price action can be much more volatile. Many pre-market and after-hours traders are also institutional investors who trade mutual funds and hedge funds, which means that retail investors must compete with professionals who are better equipped to execute their orders than l average individual investor.
Bell opening hours
The New York Stock Exchange and the Nasdaq Stock Exchange open at 9:30 am Eastern time and close at 4:00 pm Eastern time, but different exchanges around the world open at different times of the day. day. For example, many futures markets have an opening bell followed by a morning and afternoon session. Option markets also tend to have different opening bells depending on the trade. Traders should be aware of these times before trading on the market.
On the foreign exchange market (forex), there is no opening bell since the market operates 24 hours a day, six days a week. However, the start of the trading day is often considered to be 5:00 pm Eastern time until the same time the next day.