Hours market stock trading
The trading rules and the trading systems used by a market define its market structure. They determine who can trade; what they can trade; and when, where, and how they can trade. They also determine what information traders can see about orders, quotations, and trades; when they can see it; and who can see it.
Market structure is extremely important because it determines what people can know and do in a market. Since power comes from knowledge and the ability to act on it, market structure helps determine power relations among various types of traders. These relationships greatly affect who will trade profitably. To trade effectively, you need to know the structure of every market in which you trade. The trading strategies that are successful in one market often do not work well in markets with different structures. The best order submission strategy for a given trading problem generally depends on the structure of the market where the trader intends to solve the problem. Traders therefore behave differently in different markets.
Trading sessions:
Trading takes place in trading sessions. The two types of trading sessions are continuous trading sessions and call market sessions. In continuous trading, traders can attempt to arrange their trades whenever the market is open. Trading is continuous in the sense that traders may continuously attempt to arrange their trades. In practice, they usually trade only when a trader demands liquidity. Continuous trading markets are very common. Almost all major stock, bond, futures, options, and foreign exchange markets have continuous trading sessions. In call markets, all trades take place only when the market is called. The market may call all securities simultaneously, or it may call the securities one at a time, in a rotation. Markets that call in rotation may complete only one rotation per trading session or as many notations as their trading hours permit. Markets that call in rotation were once very common. Now only the stock markets of a few small countries call in rotation.
The main advantage of call markets is that they focus the attention of all traders interested in a given instrument at the same time and place. When buyers and sellers search for liquidity at the same time and place, they can easily find each other. The main advantage of continuous trading is that it allows traders to attempt to arrange their trades whenever they want. This flexibility can be very important to impatient traders who do not want to wait for the next market call.
Trading hours:
A markets trading hours specify when the market accepts orders and arranges trades. Continuously trading markets schedule their regular trading sessions during normal business hours. They often open an hour or two after the start of the business day and close an hour or two before the end of the business day. The New York Stock Exchange and the Nasdaq Stock Market, for example, open at 9.30 A.M. and close at 4 P.M. Eastern Time. Traders use the hours before the open to collect and submit orders. They use the hours after the close to settle trades and to report the results to clients.
Some markets trade at odd hours within their time zone so that they can be open during normal hours in another time zone. The Pacific Exchange opens trading at 6.30 A.M. Pacific Time and the Chicago Stock Exchange opens trading at 8.30 A.M. Central Time to coincide with the New York Stock Exchange opening at 9.30 A.M. Eastern Time. Since many currency markets trade around the clock, foreign exchange traders often keep very unusual hours.
Some markets permit trading after normal hours in special after-hours trading sessions. Exchanges provide their sessions to appeal to clients in other time zones or to permit traders to clean up their positions after the regular trading session. For example, the Chicago Board of Trade, the Chicago Mercantile Exchange, and the FINEX division of the New York Cotton Exchange all run nighttime trading sessions in many of their contracts. Many electronic trading networks provide extended trading hours for their clients.
This extended-hours market activity is managed by Electronic Communication Networks, or ECNs. The largest and most active company in this area is Instinet Group. Instinet ECN and its subsidiaries handle most of the volume of extended-hours trading. Much of this trading volume comes from institutional investors, lsuch as mutual funds. However, individual investors also have access to the system, and an increasing number of small investors use extended-hours trading services. Instinet is a subsidiary of the British conglomerate Reuters Company. Two other exchanges offering extended-hours trading are Island ECN and Archipelago ECN. Most brokers use one of these three services, but others are available.
The stock market is a pure expression of a free market economy in action. It is more than a symbol for a free market, it is the free market. Without government or outside intervention, individuals can decide for themselves whether the price that someone is charging to sell their share of ownership in a company is a fair price or not. If they decide that it is a fair price, they can choose to purchase an ownership interest in the company.
Execution systems:
Every market has procedures for matching buyers to sellers. These procedures define the execution system of the market. Since the execution system is the defining characteristic of a market, analysis frequently classify markets by their execution systems. The three main types of markets are quote-driven markets, order-driven markets, and brokered markets. Hybrid markets use some combination of these three systems.
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