Image Source: Amazon.com
An Overview
In
business, a trading day or regular trading hours (RTH) is the period of time
that an exchange is open, as opposed to electronic or extended trading
hours (ETH). Trading days are
generally Monday to Friday. At the end of a trading day, all transactions end
and are frozen until the start of the
next trading day.
The
knowledge of trading days in a year allows investors and traders to plan strategies, plan transactions and make
informed decisions. From the stock market to the futures market, including the
forex and cryptocurrency markets, each
segment operates on its own trading schedule.
Main Insights:
The NYSE and NASDAQ stock exchanges average
approximately 252 trading days per year. This corresponds to 365.25 (average
days per year) * 5/7 (proportion of working days per week) – 6 (weekdays
holidays) – 4*5/7 (fixed holidays) = 252.03 ≈ 252.
Calculation-The Trading Days Formula
To
calculate trading days, subtract weekends and holidays from the total number of
days in a year, which is typically 365. In the period from 1990 to 2022, the average annual number
of stock market trading days was always around 252.
However, there were slight fluctuations, taking into account the period from 1990 to 2021, the average was 252,875. It should be noted that while this number is generally stable at 252, it can fluctuate slightly.A closer look at the computer components reveals these nuances.
Stock
Market Non-Operational-Holidays
There
are nine holidays that the New York Stock Exchange (NYSE) observes each year,
and they are as follows:
● New Year’s Day (January 1st)
● Martin Luther King, Jr Day (The
third Monday of January)
● Presidents’ Day (The third Monday in
February)
● Good Friday (The Friday before
Easter Sunday)
● Memorial Day (last Monday of May)
● Independence Day (July 4th)
● Labor Day (The first Monday in
September)
● Thanksgiving Day (The fourth
Thursday of November)
● Christmas Day (December 25th)
Some
public holidays coincide with weekends (Saturdays and Sundays). Specific rules
apply to market holidays in such cases. There are actually 2 rules:
● If the public holiday falls on a
Saturday, the stock market is closed on
the previous Friday.
● The markets remain closed on the
following Monday, as a public holiday comes on a Sunday.
On
or near certain holidays, stock markets
remain open while bond markets remain closed or close early. The NYSE and
NASDAQ will follow the federal government's holiday closure plan, except for
Veterans Day (open), Columbus Day (open), and Good Friday (closed).
Trading Styles Impact on Trading Days
The
number of trading days a trader uses can
vary depending on his or her trading style. For example, day traders trade
every day, unlike swing traders and position traders. Factors such as holidays,
family events, illnesses or meetings can also make participating in trading
difficult for traders of all styles.
Swing Trading:
Swing
trading is a trading strategy that uses both fundamental and technical analysis
to profit from large price movements and avoid periods of inactivity. Swing
trading generally involves holding a
long or short position for more than one trading session, but no longer
than a few weeks or months. While swing trading gives investors the opportunity
to profit from short-term price movements, it also carries the risk that if the
market moves in the opposite direction to the investor’s position that they
will lose potential returns.
Position trading:
Position
trading is a trading strategy where traders hold their positions for long
periods, usually weeks to months, to see and listen to trends to make a profit
although position trading allows traders to exploit them over long periods of
growth in the market, which can be more profitable than short-term.
Market Volatility-Trading Days
Image Source: Medium
Market
volatility is known that some trading days, such as the first and last day of
the month or the days before and after public holidays, are more volatile,
which may affect trading success on
these days.
Riskiest
Time Frames For Trading-Hours
Even
though a normal trading day lasts six and a half hours, they are not that
volatile and risky. During the first and last hour of each trading day you will
observe high trading volume and prices
fluctuate up and down every second. In the morning, many people trade stocks
that are in the news: earnings reports, major events, etc. In the last hour,
volume and volatility have increased again as traders try to close remaining positions. For day traders, these
are the two most important moments of
the day. Outside the first and last hours the market is much more stable unless
there is important news.
Riskiest
Time Frames For Trading-Days
It
is also worth noting that some trading
days are riskier than others due to
various factors.
● First and last days within each
month.
● The first Friday of each month when the stock
report is released
● The days when the results of the largest companies are published are announced every day by the Fed – or the Federal Open Market Committee (FOMC), as they are officially known.
Best
Months For trading
Now
that you know how to trade based on the day of the month or week you're in,
it's time to look at how to trade on some "special" months.
January
Effect:
Many
believe this is because investors are
returning to work after the holidays with a positive attitude and
looking for new opportunities.
The
September Effect:
September
is considered a good month to sell by
many traders for many reasons. First, this is the worst performing month for
the three major US indices.Additionally, many individual traders close their
positions to offset learning costs. Finally, a lot of what could happen in
October.
October
- The Month With The Highest Volatility:
There
is no exact reason why October stands out, but some experts believe it is due
to the stock market crashes of 1929 and
1987, which occurred this month. For this reason, many investors are afraid of this month. Historically, however, October
was a positive month, even if the gains were rather limited.
Christmas
Eve discount :
In
the last days of the year, many traders
are closing their positions. So now is a good time to buy stocks if you want to
buy them at a discount and also take advantage of the big purchases in early January.
Trading
Days in Years: 2023-2024-2025
The
number of trading days for the next 3 years is approximately the same.
➔ There will be a total of 252 trading days in
2023.
➔ In 2024 the stock market calendar will have
251 days.
➔ In 2025, the total wide variety of days on
which stocks may be traded is 250.
However,
there may be exceptions for weekends or
other special circumstances that may affect the number of trading days, such as
unscheduled market closures due to natural disasters, terrorist attacks or
other events.
Frequently
Asked Questions:
➢ Are trading days business days?
Trading
days are business days.Trading days mark the time when stock exchanges and other financial markets
are open and stocks and commodities are actively traded for companies and
investors.
➢ Define power hour when discussing
the stock market?
The
stock market hour refers to the first and last hours of the trading day, which
are known for increased activity as traders actively enter or exit positions.
This intensity is particularly visible on Fridays and Mondays, which are
considered the most active days of the week and where investors, institutions
and retailers strategically conduct trading activities.
Is
it possible for day traders to execute trades outside of regular trading hours?
Yes,
day traders can trade outside of business hours with the two-hour trading plan.
This approach allows them to benefit from market open and close volatility without being subject to the Pattern Day
Trader (PDT) rule. This flexibility in trading hours gives day traders with
small account sizes the opportunity to explore additional opportunities and
benefit from after-hours market movements.