What is the opening bell?

The opening bell is a tangible bell that is rung to signify the start of trading on the stock exchange. It is also used metaphorically to indicate the beginning of trading for that day.

Definition and Example of the Opening Bell

Trading in financial markets starts at a specific time at all exchanges. Typically, the opening of trading begins with the sound of a bell. This is the origin of the term “opening bell.”

For example, the New York Stock Exchange (NYSE) opens at 9:30 AM Eastern Time. This is when the opening bell is physically rung and signaled.

How Does the Opening Bell Work?

The main function of the bell is to signify the start of trading on the stock exchange. The number of bells used can vary according to the exchange. For instance, the New York Stock Exchange has four opening bells that operate centrally on the trading floor.

In addition to starting the trading day, ringing the opening bell on the stock exchange can be a media opportunity for a guest or a company.

Sometimes, an executive from a recently listed company rings the opening bell. For example, on August 3, 2021, co-founder and CEO of Hippo Holdings, Assaf Wand, rang the opening bell at the New York Stock Exchange to celebrate Hippo’s initial public offering. On other days, a celebrity may ring the opening bell. For instance, on August 10, 2021, Olympic water polo player Ashleigh Johnson rang the opening bell at the New York Stock Exchange to celebrate her second gold medal win at the Olympics.

Notable Events

Traders began ringing the opening bell in the 1870s when the exchange started hosting continuous trading throughout the day. The original bell was replaced by an electric bell in 1903.

Later, the New York Stock Exchange refurbished another bell from 1903 to serve as a backup electronic system.

While it is now typically rung by entrepreneurs, CEOs, and other notable figures, the first person to ring the bell as a guest was a 10-year-old boy named Leonard Ross in 1956. Ross earned the honor after winning first place in a television quiz show about the stock market.

What Does This Mean for Individual Investors?

Although ringing the opening bell at the New York Stock Exchange can be an exciting media opportunity, data suggests that the opening bell ringing for a company does not significantly impact its stock price.

If the company ringing the opening bell is celebrating its first listing on the New York Stock Exchange, its stock price is usually positively affected. However, this can be the result of other factors unrelated to the bell ringing itself.

It is worth noting that the ringing of the opening bell at the New York Stock Exchange is not the only signal of the beginning of the trading day. The Nasdaq, London Stock Exchange, and Tokyo Stock Exchange, for example, all commence trading with their own opening bells as well.

In the United States, regular trading hours at most exchanges begin when the opening bell rings at 9:30 AM Eastern Time and end when the closing bell rings at 4 PM Eastern Time.

Depending on the broker or investment platform you use, you may have the option to place orders before the opening bell and after the closing bell.

Brokers often limit trading to specific orders during pre-market and post-market trading sessions. Although stock prices can fluctuate significantly during these sessions, the opening and closing bells still represent the beginning and end of the core trading session.

Source:

https://www.thebalancemoney.com/what-is-the-opening-bell-5203346