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April 18, 2021, 1:53 p.m. EDT

The Most Frequently Asked Questions About The Stock Market In 2021

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Apr 18, 2021 (StockMarket.com via COMTEX) -- A Beginners Guide To The Most Common FAQs About The Stock Market Today

If the thought of investing in the stock market frightens you, you are not alone. It's natural to be cautious as you take your first steps into investing. This is especially true if you're not too well-versed in the basics of the stock market. It may be tough to start as the stock market jargon can almost sound like a foreign language.

The key to building wealth is developing good habits. We're here to tell you that you don't need to be the Wolf of Wall Street to start trading stocks . It's okay even if you think you fall short in terms of financial knowledge. Everybody was once a beginner. Start by understanding some of the basic mechanisms of the stock market today . Learn the forces that influence stock prices, pay attention to how macroeconomic issues affect stock price direction, and most importantly learn about how to actually buy and sell stocks. After all, it's about developing a feel of how to invest.

What Is The Stock Market?

Investing to reach financial freedom is a dream many people share but few ever achieve. To many, one of the best ways to achieve that is to get started in the stock market. So, here begs the question, what is the stock market? The term "stock market" often refers to the collection of markets and exchanges where regular activities of buying, selling, and issuance of shares take place. Simply put, the stock market enables buyers and sellers to make a trade of shares of publicly-listed companies.

Getting into the stock market for the first time can be intimidating for beginners, especially if you don't know how the stock market works. Before you start your investing journey, you also need to know where to buy stocks. While today it is possible to purchase almost everything online, there is usually a designated market for every commodity. Such dedicated markets serve as a platform where numerous buyers meet, interact, and transact. For instance, when you need groceries, you go to the supermarket. When you're looking for stocks to buy today , you go to the stock market.

Assuming you're based in the U.S., you most probably have heard of global stock exchanges like the New York Stock Exchange or the Nasdaq. Or if you plan to start your investing journey straight to other asset classes such as options and futures (which is normally not recommended), you might have heard of the Chicago Board Options Exchange (CBOE). These leading exchanges, along with several other exchanges operating in the country, form the U.S stock market.

How Does The Stock Market Work?

It is also worth mentioning that the stock market isn't exactly like a grocery store. To buy and sell stocks, you need to go through an intermediary known as a licensed brokerage. That's because the stock market is a secured and regulated environment where market participants can trade shares with low, if not zero operational risk.

The stock market also acts as primary markets and secondary markets. Now, what do I mean by that? For starters, the primary market is where shares are issued and sold to investors for the first time through the process of an initial public offering (IPO). If you're passionate about getting into the investment world, you may have heard about the most recent popular IPOs like Airbnb ( NASDAQ: ABNB ) or Roblox ( NYSE: RBLX ). Above all, this process allows companies to raise capital from investors.

Following the IPO process, the stock exchange serves as a trading platform that facilitates regular buying and selling of the listed stocks. This constitutes the secondary market. The stock market exchange earns a fee for every transaction that occurs on its platform during the secondary market activity. When buying stocks on the primary market, investors are purchasing stocks directly from the issuer. The secondary market is where existing stocks are traded between investors or traders.

[Read More] Best Stocks To Buy Now? 4 Cyclical Stocks To Consider

What Time Does The Stock Market Open?

When does the stock market open? This may seem like a simple question, but the answer isn't as straightforward as you'd think. The regular trading hours for the U.S. stock market, including the New York Stock Exchange and the Nasdaq are from 9.30 a.m. to 4 p.m. Eastern time on weekdays (apart from stock market holidays).

But what if I told you trading can also occur outside normal stock market hours? For instance, on regular market days, there is 'pre-market trading. While the hours may vary, they can start as early as 4 a.m. while most pre-market trading takes place between 8 a.m up until regular trading hours begin at 9.30 a.m.

What Time Does The Stock Market Close

As mentioned above, the regular trading days closes at 4 p.m. Eastern time. However, on early-closure days, which are typically right before or right after a market holiday, the markets will close early, usually at 1 p.m. +0000.

There are also 'after-hours sessions', which typically span from 4 p.m to 8 p.m Eastern time. It's worth mentioning that these trades taking place outside regular hours are made over electronic communication networks (ECNs), which allow buyers and sellers to connect directly rather than via a middle person. While this type of trading was previously only accessible by large institutional players, there are increasingly more brokers such as Interactive Brokers and Fidelity which can facilitate this type of trading today.

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Is The Stock Market Open On Weekends?

Considering the advancement of technology today, it's natural for some investors to ask - why don't stocks trade over weekends? Especially when cryptocurrencies are trading 24/7. As you probably know, there are no regular trading hours for stocks on Saturdays or Sundays. However, if you see a headline on Sunday night saying that stock futures are up, that's because the futures market begins trading at 6 p.m. Eastern time on Sundays.

Stock Market Holiday Calendar 2021

  • New Year's Day: Friday, Jan. 1

  • Martin Luther King Jr. Day: Monday, Jan. 18

  • Washington's Birthday/Presidents Day: Monday, Feb. 15

  • Good Friday: Friday, April 2

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