Stock Market Basics: Hours, Orders, Circuit Breakers
2024-04-17·8 min read·By StockifyX Basics
How the Stock Market Works
When a company wants to raise capital, it can sell ownership stakes to the public through an IPO (initial public offering). Those shares then trade on exchanges like the NYSE or NASDAQ where buyers and sellers continuously negotiate prices. The price you see reflects the last transaction price — the consensus of what buyers are willing to pay and sellers are willing to accept at that moment.
Trading Hours and Sessions
- Pre-market: 4:00 AM – 9:30 AM ET. Lower volume, wider bid-ask spreads, more volatile. Earnings reactions often occur here.
- Regular session: 9:30 AM – 4:00 PM ET. Highest liquidity. Best time for most trades.
- After-hours: 4:00 PM – 8:00 PM ET. Thin liquidity, large moves on earnings announcements common.
Order Types You Need to Know
- Market order: Executes immediately at the best available price. Use only in liquid stocks.
- Limit order: Executes only at your specified price or better. Protects against poor fills in fast markets.
- Stop-loss order: Triggers a market sell if price falls to your stop level. Essential for controlling downside.
- Stop-limit order: Like a stop-loss, but fills only at a specified limit price. Risk: may not fill if price gaps past your limit.
Market Indices
The S&P 500 tracks the 500 largest US companies by market cap — it is the standard benchmark for US equity performance. The Dow Jones Industrial Average tracks 30 large companies. The NASDAQ Composite is tech-heavy. When people say "the market was up today," they usually mean the S&P 500 closed higher.