Whether you’re a newbie, expert, or not a stock trader at all, you’re most likely aware that the stock market does not open for trading for 365 (or 366) days in a year. But how many trading days in a year are there?
The number of trading days varies; however, the US stock market has 252 trading days each year. That said, leap years, like 2020, have 253 days.
It is essential to know the number of trading days in a year but even more important to understand what causes the variation in the number of trading days. Before we proceed, let’s define what trading days are exactly.
What Is a Trading Day?
A trading day (or regular trading hours – RTH) refers to the period, usually a day when the stock exchange market is open for business. Ideally, unless there’s a holiday or any other national event, the stock market opens from Monday through Friday.
The trading time for the New York Stock Exchange (NYSE) and the Nasdaq Exchange opens from 9:30 am to 4:00 pm EST. The ringing of the opening bell marks the start of a trading day, and the closing bell marks the end of a trading day. Once the closing bell rings, all trading freezes until the beginning of the next available trading day.
Also, a pre-market session holds between 8:00 am to 9:30 am before the day opens for trading, and an after-hour trading session holds from 4:00 pm to 6:30 pm EST.
Although the stock market is supposed to be open throughout the weekdays, there may be some days when this norm will not hold. Some of these days include public holidays or days scheduled for state or national functions like Independence Day or the burial of a head of state. It is also possible to have shorter trading days when trading closes before 4:00 pm.
How Many Trading Days Are in A Calendar Year?
On average, the US stock market has 252 trading days in any given year, which is 4.85 trading days per week, and 21 trading days per month. However, this number can vary depending on factors such as leap year, and like I stated earlier, holidays and state functions. For instance, 2020, a leap year, had 253 trading days while the preceding year, 2019, had 252.
Calculating the number of trading days in the US is pretty straightforward using the formula below:
Trading Days = Total Number of Days (in the year) – Number of Trading Holidays – Number of Weekends
For 2020 with 366 days and nine holidays, the calculation goes thus:
366 days – 9 days – 104 days = 253 days.
Who Determines the Trading Schedule?
The central stock exchange in the country sets the trading schedule for that country. For instance, the NYSE (or New York Stock Exchange) is in charge of setting the trading schedule in the US for the year. Almost all other exchanges in the US follow the NYSE trading schedule in terms of the number of days and hours when the market is open.
The NYSE trading schedule runs from 9:30 am to 4 pm, Mondays to Fridays. Until 1952, the stock exchange market also included a 2-hours trading period on Saturdays.
Factors that Determine the Trading Days in a Year
We’ve mentioned earlier that the number of trading days in a year is not fixed. Some factors that contribute to the varying number of trading days include:
The US stock market closes for nine federal holidays in a year; this does not mean that there are only nine national holidays throughout the year.
The following are the nine federal holidays when the Nasdaq and NYSE do not open:
- January 1st – New Year’s Day
- 3rd Monday of January – Martin Luther King. Jr Day
- 3rd Monday of February – Presidents’ Day
- Friday preceding Easter Sunday – Good Friday
- Last Monday of May – Memorial Day
- July 4th – Independence Day
- 1st Monday in September – Labor Day
- 4th Thursday of November – Thanksgiving Day
- December 25th – Christmas Day
If a national holiday falls on a weekend, there are two possibilities:
- The market will not open on the preceding Friday if the holiday falls on a Saturday
- The markets will close on the following Monday if the holiday falls on a Sunday
The market also remains open on some public holidays, including Columbus Day and Veterans Day.
Most years have 104 weekends, but this can change if the year starts on a Saturday or a Sunday. The year will have 106 weekend days if it starts on a Saturday and 105 weekend days if it starts on a Sunday. This fact also holds for a leap year.
If you’re a retail trader, weekend trades are off-limits. On the bright side, you can take the weekend to assess your trade from the previous week and create a strategy that’ll help you in the coming weeks.
Each leap year has an extra day in it. This extra day can increase trading days if it falls on a weekday or a Sunday. However, if the extra day falls on a Saturday, the leap year may not add to the number of trading days.
Major State Events
The NYSE and Nasdaq also close the stock exchange market in response to major unforeseen circumstances. These closings are not listed on the trading schedule because they are rare and only occur in reaction to unexpected events.
The most recent closure of the stock market due to a significant event was on December 5th, 2018, to mark the passing of former president George H.W. Bush. The market also closed after the death of Ronald Reagan in 2004 and 1994 during Richard Nixon’s funeral.
Can you Trade on All Trading Days?
Even if you’re the most experienced stock trader, it is quite improbable that you’ll trade on every available trading day. There are at least six trading days where it is not advisable to trade the US stock markets because of the possibility of higher volatility. These days include:
- FOMC (Federal Open Market Committee) days
- Option expiration day
- Earnings announcement days
- First day of the month
- Last day of the month
- First Friday jobs reports day
Which Month Is the Most Volatile on the US Stock Market Calendar?
October has always been the most volatile month for stock trading.
252 Trading Days a Year
Only roughly 252 days in a year are trading days, implying that the US stock market is closed for about 100 days every year. Fortunately, a successful trading result depends more on your trading strategy and the number of days you use judiciously rather than how many trading days there are in a year.