When calculating how many trading days there are in a year, it’s important to keep the following factors in mind: Holidays, weekends, Leap year, Seasonality, and weekend trading hours. Most people tend to forget about days when the market closes early, at 1 pm, such as July 3rd, July 4th, and Thanksgiving. If you consider these, there are 252 trading days in a year.
What Is a Trading Day?
A trading day is when stock exchanges are open for business. Trading days usually begin at 9:30 a.m. and close at 4:00 p.m., with small breaks in between to allow traders to adjust their orders and positions according to market movements. During these hours, investors can buy and sell stocks, bonds, options, and other financial instruments in the open market.
Trading days are important for investors because they can make decisions about when to buy and sell securities, which can drastically affect their overall returns. Therefore, understanding how tradingDays work is essential for all traders.
This includes knowing what happens before and after trading hours, as well as what markets are open during the day and how they operate. With this knowledge, traders can use trading days to their advantage and make more informed decisions to maximize returns.
Who Sets the Trading Schedule?
The relevant stock exchange sets the trading schedule for a given day. In the U.S., this would be the New York Stock Exchange (NYSE), Nasdaq, and American Stock Exchange (AMEX). Each of these exchanges has unique rules and regulations regarding when markets open and close as well as when they are in session.
For example, the NYSE is open from 9:30 a.m. to 4:00 p.m., while Nasdaq and AMEX are open from 9:30 a.m. to 5:00 p.m. These rules help ensure that all trades are conducted fairly and promptly, allowing investors to make informed decisions and take advantage of opportunities in the market.
The number of trading days in a year is based on the calendar. A year has 252 trading days plus 104 weekends. Counting the weekends will change your total tradingDays per year, as weekends push holidays further into the future. Regardless, it is important to use the days you do have wisely.
Traditionally, the stock market is open Monday through Friday. However, on public holidays and official events, the market is closed. In addition, some markets will close earlier than normal, so you’ll want to keep that in mind when making plans for the year.
In addition, you’ll want to consider that most markets will close for the weekend, as the stock market will be closed during these times.
The market is closed on federal holidays, including Christmas Day, New Year’s Day, and Independence Day. Other federal holidays, such as Thanksgiving Day, make it a half-day trading day. The day following Thanksgiving is also closed, as is July 3. There are other shortened trading days.
In the United States, the marketplace is closed on several public holidays each year, with some falling on a weekend. The first weekend of the year can also affect how many tradingDay are weekends.
The number of trading days is less if the year starts on a Saturday than if it starts on a Friday. Additionally, market closures due to national emergencies also impact the number of weekends.
For example, in December 2018, the U.S. stock market closed for a day to honor the late former head of state George H.W. Bush. In 2001, the market closed for four days following the September 11 terrorist attacks, and in 2012, Hurricane Sandy halted trading for two days.
The average number of trading days in a year is 252 days. The number of trading days varies from year to year, but there are only two months with fewer tradingDay. During the summer, the market will be closed for three half-day sessions on July 3rd, the day before July 4th, and December 24th, which fall on a Saturday. These three half-day sessions equal nine hours of trading or 1.4 trading days.
3. Leap year
A leap year is a year with an extra trading day. However, the tradingDay must fall on a weekday to be counted. For example, a leap year in January would have 24 trading days. This difference would decrease the number of tradingDays during the rest of the year.
Moreover, it would affect the number of trading days on weekends. The annual trading schedules do not include days that the stock market is closed for national emergencies. For example, the stock market in the U.S. was closed on December 5, 2018, to honor the former head of state, George H.W. Bush. In 2001, the stock market was closed for four days after the terrorist attacks of September 11 and in 2012 because of Hurricane Sandy.
Leap Days usually have favorable effects on stock markets. In fact, historically, the S& P 500 has increased by more than 6.4% on the last trading day of February. Since 1960, the only Leap Years in which the S& P 500 has declined were 2000 and 2008, both of which had the worst stock market crashes since the Great Depression.
Seasonality refers to the tendency of stock markets to perform better on certain days of the year than on others. For example, if stocks were weak in January and June, investors would be tempted to sell ahead of time. The same logic would apply if stocks were weak in November. Even though there is no specific reason for this phenomenon, there are some definite patterns.
Certain financial stocks have high demand during certain times of the year, such as Christmas, Halloween, or the summer vacation season. Stock managers attempt to anticipate this demand by adjusting inventory levels in advance. Understanding seasonality can also be useful when planning promotional campaigns.
Traders may sell during the season and buy again during the off-season. Conversely, a buyer may purchase a stock index ETF during seasonally strong months. And sell at the beginning of the next month. On the other hand, a buy-and-hold investor may want to buy during a weak month. In addition to stocks, commodities and currencies also exhibit seasonality.