How the stock market works: exchanges, market hours, pre-market and halts
Where stock orders go, the regular, pre-market and after-hours sessions, how trading halts and circuit breakers work, and what settles when.
Futures traders get used to a market that's open almost around the clock on one exchange. Stocks work differently: set hours, many trading venues, and rules that can pause a stock in the middle of a move. Knowing them saves you from surprises.
Where your order goes
U.S. stocks are listed on exchanges like the New York Stock Exchange (NYSE) and Nasdaq, but they trade on many venues at once: other exchanges and private trading systems. Your broker sends your order where it expects the best fill. You don't need to manage that, but it explains why a quote can flicker between prices so fast.
The trading sessions
| Session | Time (New York) | What it’s like |
|---|---|---|
| Pre-market | From as early as 4:00 a.m. to 9:30 a.m., depending on your broker | Thin trading, wide spreads, big moves on news |
| Regular session | 9:30 a.m. to 4:00 p.m. | Most of the volume, especially the first and last hour |
| After-hours | 4:00 p.m. to 8:00 p.m. (varies by broker) | Earnings reactions, thin trading |
Outside regular hours, many brokers only accept limit orders, and prices can jump between trades. See order types explained.
Pre-market prices are real, but the crowd behind them is small.
Trading halts and circuit breakers
- Single-stock pauses: if a stock moves too far too fast, trading in it pauses for a few minutes (the “limit up, limit down” rules). It then reopens, often with a jump.
- News halts: an exchange can halt a stock while important news comes out.
- Market-wide circuit breakers: if the S&P 500 falls 7%, then 13% in a day, all stocks pause for 15 minutes (only before 3:25 p.m.). At 20%, trading stops for the rest of the day.
A halt can leave you stuck in a position with no way out until it reopens, which is one reason to size stock trades so a gap won't break your rules.
Settlement
When you buy a stock, the trade officially settles one business day later (called T+1). In a cash account, you can only trade with settled money, which limits how often you can reuse it. More on that in the PDT rule and cash vs. margin accounts.
Prices move in pennies
Most stocks above $1 move in $0.01 steps. Your result is simply the price change times the number of shares: 100 shares up $0.50 is $50. There's no contract multiplier like in futures (see ticks, points and leverage). Next in this series: day trading stocks.
This article is for education only and isn't financial advice. Trading stocks involves substantial risk of loss. Market rules differ by country and broker and can change; check your broker for the rules that apply to you.