Opening Bell

DEFINITION of 'Opening Bell'

A bell that is rung to signify the start of the day’s trading session. The opening bell is both the symbolic opening of the trading day and a physical event involving an individual striking a metal bell. Since 1985, the New York Stock Exchange (NYSE) has used the opening bell to start its trading session at 9:30 a.m. Eastern Time.

BREAKING DOWN 'Opening Bell'

Physical trading floors have become less common over the years with the rise of electronic trading. Most traders use the term opening bell as a synonym for the opening of a given market. The physical open bell has become a ceremonious event where dignitaries visiting the stock markets or companies that are trading for the first day are given the honor of ringing the bell.

The first bell was a Chinese gong, but in 1903, the gong was replaced by a brass bell that’s now electronically operated. The bell is also accompanied by the gavel that’s used in conjunction with the closing bell in recognition of 19th century stock calls.

The New York Stock Exchange’s website lets visitors view the opening and closing bell each day from anywhere in the world.

Before the Opening Bell

Many exchanges offer pre-market trading that occurs before the opening bell. During this time, traders and investors may place trades based on news that occurred overnight or before the opening bell and the start of the trading session.

While pre-market trading has its advantages, there are several important risk factors to consider. Pre-market trading tends to have less liquidity than regular hours, which means that bid-ask spreads may be wider and price action may be significantly more volatile. Many pre-market and after-hours traders are also institutional investors, including mutual funds and hedge funds, which means that retail investors are stacked up against professional competition.

Opening Bell Times

The New York Stock Exchange opens at 9:30 a.m. Eastern Time and closes at 4:00 p.m. Eastern Time, but different exchanges open at different times of the day. For example, many futures markets have an opening bell followed by a morning and afternoon session. The options markets also tend to have different opening bells depending on the exchange. Traders should be aware of these times before trading in the market.

In the foreign exchange (forex) market, there is no opening bell since the market operates 24-hours per day for six days per week. The start of the trading day, however, is often considered to be 5:00 p.m. Eastern Time until the same time the next day.