Whether you are an active day trader or have invested some funds in the stock market, you might be aware that the stock market doesn’t open all days a week, limiting the number of trading days each year. This article will debrief how many trading days there are in a year. We’ll also discuss why trading days fluctuate and who defines trading schedules, and what factors can impact how often you trade. But first, let us explain a trading day.
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What Is a Trading Day?
A trading day refers to any day when the stock market is open. Unless there is a big event at a national level, such as National Holiday, the market usually remains open from Monday through Friday. It is worth mentioning that regular trading hours (RTH) are different from electronic trading hours (ETH).
From 9:30 am until 4:00 pm, the Nasdaq and the NYSE exchanges remain open for business. The trading day begins and closes with the bell’s ring in most cases. As soon as the closing bell sounds, all trading ceases and resumes on the next day.
Sometimes the stock market remains closed even on weekdays. For instance, a funeral of a state’s head is a public holiday or a day designated for a state event. Also, the market may shut down at 1:00 pm instead of 4:00 pm due to unavoidable circumstances, like an emergency.
How many trading days are there in a year in the United States?
Usually, a trading year averages 252 days, or 21 days per month and 63 days every quarter. However, the numbers keep fluctuating from year to year. For instance, there were 252/365 trading days in 2019 and 253 in 2020 since it was a leap year. Last year had 252 trading days. March had the most 23, while other months averaged 21 days per month, or 63 days each quarter. Notably, 104/365 days were weekends, besides 09 market holidays in 2021.
Below is the simple equation you may use to find the number of trading days in a year.
Total trading days per year = Trading days – (Weekends + Holidays)
= 365 – (104+9)
Who defines trading hours?
The primary stock exchange in each nation sets the trading timetable for the stock market. The NYSE determines the trading timetable in the US, and most other stock exchanges follow it for both days and hours. In addition to trading hours Monday through Friday, the NYSE practiced a two-hour trading session every Saturday until 1952. However, the NYSE and other US exchanges now stick to Friday – Mon trading schedule.
The New York (NY) time zone is the base of the trading hours. Hence, traders from other time zones must trade during the NYSE’s trading day. These exchanges allow remote trading via electronic platforms, but only during designated market hours. The NYSE remains open between 9:30 am to 4:00 pm ET for those not in the Eastern Time Zone. In California, the market timings are from 6:30 am to 1:00 pm.
Why does the number of trading days vary?
As mentioned earlier, the number of trading days varies annually. This variation can be due to holidays, weekends, leap years, or significant events. Let’s have a quick look at each of the listed variables.
In 2021, the US had several federal holidays like Columbus Day and Veterans Day. However, the stock market didn’t close on all of them except the Good Friday, a non-government holiday. The stock market has nine annual holidays in the year, which are as follows:
- Jan 01, 2021 – New Year’s Day
- Jan 18, 2021 – Jr. Martin Luther King’s Day
- Feb 22, 2021 – Presidents’ Day
- Apr 02, 2021 – Good Friday
- May 31, 2021 – Memorial Day
- Jul 04, 2021 – Independence Day
- Sep 06, 2021 – Labor Day
- Nov 25, 2021 – Thanksgiving Day
- Dec 25, 2021 – Christmas Day
Note: The stock market observed any holiday falling on a weekend on the last day of the previous week or the first day of the following week.
As stated previously, the US market has nine official holidays, and you might wonder why the number of trade days changes when the same number of holidays are honored each year? The answer is in the number of weekends every year.
Yearly weekend days vary based on when the year’s first-weekend fall. Even though it’s a leap year, business days get reduced if the year begins on a Saturday.
The stock market might close unexpectedly due to major national events not foreseen in the trading schedule. For example, on Dec 05, 2018, the US stock market closed to mourn former President (George H.W. Bush). The market also remained closed in 2012 for two days due to Hurricane Sandy and four days in 2001 due to the terrorist attack on Sep 11, 2001.
Leap years have one extra day every four years. This extra day increases the total number of trading days per year. For example, 2020 had 253 trading days. However, a weekend starting on Saturday can prevent a leap year from adding an extra trade day.
Do you trade every day?
Since now you know how many trading days are there in a year, you might ask if you can trade on each one? Even for day traders, that isn’t certain. Factors that generally restrict the number of business days each year include.
Important family reunions, dental appointments, illness, or other occasions might keep you from trading. Therefore, the chances are that you might not be able to trade, even if you wish.
A devastating defeat or a losing streak usually necessitates some time off. Doing so allows you to de-escalate and restore emotional control.
Being a day trader is demanding, especially when constantly checking your trading screen for excellent trade setups and maintaining open positions. Vacation time is quite beneficial but will undoubtedly decrease your trading days.
If you are a day trader, you probably find yourself entering trade setups on almost all trading days. However, that might not be the case for swing traders. They won’t trade on all trading days unless they find setups that fit their plan, which may not be that frequent.
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