The “opening bell” is a tangible bell rung to signify the beginning of trading on a stock exchange. It is also used as a metaphor to indicate the start of trading that day.
Learn more about the opening bell and what it signifies.
Definition and Example of the Opening Bell
Stock market trading begins at a set time on all exchanges. The opening of trading usually starts with the sounding of a bell. This is where the term “opening bell” comes from.
For instance, the New York Stock Exchange (NYSE) opens at 9:30 a.m. ET. This is when the opening bell is rung both physically and metaphorically.
How Does the Opening Bell Work?
The bell's main function is to signify the start of trading in a stock exchange. The number of bells used can vary based on the exchange. For example, the NYSE has four centrally operated opening bells on its floor.
In addition to starting the trading day, ringing a stock exchange’s opening bell can be a media opportunity for a guest or a company.
Sometimes, an executive from a newly listed company rings the opening bell. For example, on Aug. 3, 2021, Hippo Holdings’ CEO and co-founder, Assaf Wand, rang the NYSE’s opening bell to commemorate Hippo’s IPO. On other days, a notable individual might ring the opening bell. For instance, on Aug. 10, 2021, Olympic water poloist Ashleigh Johnson rang the New York Stock Exchange’s opening bell to commemorate the winning of her second Olympic gold medal.
The NYSE is not the only exchange that marks the start of its trading day with the ringing of an opening bell. The NASDAQ, London Stock Exchange, and Tokyo Stock Exchange, for example, all begin trading with the ringing of an opening bell, as well.
In the United States, regular trading hours on most stock exchanges begin when the opening bell rings at 9:30 a.m. ET and end when the closing bell rings at 4 p.m. ET.
Depending on the brokerage or investing platform you use, you may have the option to place orders before the opening bell and after the closing bell.
Brokers often restrict trading to limit orders during these pre-market and after-market trading sessions. Although stock prices can change significantly during these sessions, the opening and closing bells still represent the beginning and end of the core trading session.
Traders started ringing an 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 reconditioned another 1903 bell that serves as a backup to the current electronic system.
While the bell is usually now rung by entrepreneurs, CEOs, and other notable individuals, the first guest ringer was a 10-year-old named Leonard Ross in 1956. Ross won the honor by finishing first in a television quiz show about the stock market.
What It Means for Individual Investors
Although ringing the opening bell at the New York Stock Exchange can be an exciting media opportunity, data suggest that a company ringing the opening bell doesn’t appear to affect its stock price significantly.
If the company ringing the opening bell is celebrating being listed on the NYSE for the first time, then its stock price is generally positively affected. However, this could be the result of factors other than the ringing of the bell itself.
- The opening bell sometimes indicates the beginning of a stock market’s regular trading hours. In other instances, it refers to an actual bell that signifies the opening of a stock market.
- By contrast, the closing bell can signify the end of regular stock market trading for the day.
- Notable individuals often ring the opening bell at the beginning of stock market trading.
- While the opening bell signifies the beginning of regular stock market trading hours, it is possible for investors to make trades both before the opening bell and after the closing bell.
- Although ringing the opening bell presents a media opportunity for a company, doing so does not appear to affect the company’s stock price.