Closing

Like closing time at your local bar, only for financial markets...you don't have to go home, but you can't trade here.

You've seen it on TV. The bell rings at the end of a busy trading day on Wall Street. This ceremony takes place at the New York Stock Exchange, which rings a bell (electronically) at 4 pm Eastern Time. Other exchanges don't necessarily have a physical closing noise (we suggest a walrus call for the NASDAQ), but the term "closing" still gets used to mark the end of that day’s trading session.

However, the word "closing" has a relatively loose meaning. Just because a market has "closed" for the day does not mean that trading has stopped. Called pre- and post-market trading, international electronic communication networks allow traders to continue to make deals outside of official trading times for the major exchanges.

It is also common practice for companies to hold off on making any big announcements that could greatly affect their share price while the markets are open. Instead, the firms will release the information before the open or after the close.

At exactly 4 pm the work begins to calculate the closing price for each security. The closing price is used to match as many buy and sell orders as possible.