Wondering how many trading days in a year? To be successful in stock trading, you need to know when is the right time to buy and sell your stocks. Whether you’re planning to hold stocks for the long haul or trade on a frequent basis, you should have a clear idea of how many days a year is the stock market open. This is especially important if you’re doing day trading, because you need to buy and sell your stocks at precisely the right time to make profits. Knowing when the stock market will be closed enables you to properly plan your trades to achieve better results.
The number of stock trading days in a year may vary from one year to another. Below is a comprehensive guide to understanding how many trading days in a year.
- What are trading days?
- How to calculate trading days in a year
- How many days can you trade in a year?
- Day trading vs.s swing trading
What Are Trading Days?
Trading days can be defined as the days on which a given stock exchange is open. Normally, a stock market is open from Monday to Friday every week. However, different stock exchanges may have different opening and closing hours. For instance, the New York Stock Exchange opens at 9:30 a.m. and closes at 4 p.m. After 4 p.m., share trading is frozen until the following day.
Although stock exchanges are typically open from Monday to Friday, there are some circumstances that may influence the number of trading days in a year. For instance, if there are public holidays or state functions, you’ll have fewer trading days in a year.
How to Calculate Trading Days in a Year
On average, a year has 252 trading days. However, this number may change if there are more public holidays and state functions. Additionally, there are some days that may have fewer trading hours than others. To calculate how many stock trading days in a year, use the following formula:
Number of days in the year — number of weekends — number of half trading days – number of holidays = Total trading days in the year
For instance, to calculate the stock market trading days in 2014, you have to take into account that there were 365 days, 104 weekends, and nine public holidays. So, the total number of trading days in that year was: 365 – 104 – 9 = 252 days.
In addition, it’s important to factor in the days that stock trading took place for only half a day. In the same year, the markets closed at 1 p.m. on the eve of July 4, the day after Thanksgiving, and the eve of Christmas. This led to a loss of nine trading hours or 1.4 days. So, the total number of trading days in 2014 was: 252 days – 1.4 days = 251 days.
How Many Days Can You Trade in a Year?
As a trader, you won’t be getting sick days or time off for vacation or training the way a regular full-time employee does. If you’re a day trader, you’ll be basically missing an opportunity to make money if you aren’t trading when the market is open. Besides knowing how many stock trading days in a year, you also have to take into account the number of days you may need to take a break from trading. The following is a list of circumstances that may reduce the number of days you’re able to trade in a year.
When done on a frequent basis, stock trading can be a stressful activity. You need to be able to overcome the stress and maintain a calm and focused mind in order to be successful. Going on a vacation once in a while is an effective way to relieve stress and rejuvenate your mind. People who work full-time typically get about two weeks of vacation time a year. This may vary depending on their employers, the countries they live in, and their individual needs.
Let’s say you plan to set aside 10 days for vacation. Considering the average number of days on which the stock market is open is 252 days, you actually have 242 days to trade in a year.
After factoring in weekends, holidays, state functions, half-days, and vacation time, you need to take sick days into account. Similar to everybody else, you’re vulnerable to falling ill, which can have an impact on your ability to work effectively as a trader.
The number of sick days you need to take in a year depends on your age, personal health, and family’s health. Assuming you maintain the best health practices, you may need to take at least three sick days a year. However, if you have kids, you may have to take additional time off to care for them if they fall ill. Even if you’re trading from home, it can be difficult to focus on trading while looking after your kids. Let’s say, the number of days your children get sick in a year is seven days.
If you’re a healthy person and have kids, you have to take at least 10 days off in a year because of illness. As such, you’ll only have 232 days to trade in a year. If you don’t have children, you’ll probably need at least three days off, so you’ll have 239 trading days.
In every occupation, there are good and bad days. Regardless of your trading skills, you’re bound to come across days when everything seems to go wrong. These days may occur when you least expect them, and there’s nothing you can do about it. Some traders choose to keep on trading when things aren’t going their way, but this approach can prove costly. One effective way to reduce your losses is to trade less or avoid trading altogether during trading slumps. If you can wait for a slump to pass, you’ll be in a better position to make profits.
The average number of days when market conditions are unfavorable is four days. So, by subtracting four days from the previously calculated 232 remaining trading days, you have 228 days to trade in a year.
While you may have a detailed trading schedule, unexpected situations can happen and momentarily derail you from your plan. For instance, you may experience a power outage or bad internet connection or get involved in a road accident, which can make it difficult or impossible for you to stick to your normal schedule.
In any given year, you can expect to lose at least three trading days to unexpected circumstances. Therefore, you may only have 225 days to trade in a year.
Lack of Good Trades
In order to increase your profitability as a trader, you have to be able to choose the right stocks to invest in. This may not always be possible because there are times when it can be difficult to find appealing trades in the stock market. This is especially the case when there’s little or no volatility in the market. Such a situation often happens after the market experiences big moves or when the holidays are approaching.
On average, the stock market sees a lack of activity for about seven days in a year. As such, the total number of days you can trade in a year is reduced to 218 days. Compared to the number of days the stock market is open in a year, you can expect to lose 34 trading days because of all the above-mentioned circumstances.
Day Trading vs. Swing Trading
The number of days you’re able to trade in a year may be more or less important depending on the type of trading you’re doing. If you’re a swing trader, losing 30 to 40 days may not mean much because you’ll be buying stocks and holding them for a few days or weeks. The potential for making profits won’t be as linear as that of day trading. However, you can still get good profit margins because you can earn substantially on winning trades. Perhaps, knowing how many trading weeks in a year is more relevant in this situation.
If you’re a day trader, every day counts. So, being unable to trade for an additional 30 to 40 days in a year can have a significant impact on your overall profitability. Since you’ll typically close all your positions by the end of each day, you won’t have to hold trades overnight, which makes it less risky to take time off trading.
Stock trading can be a profitable venture if you’re able to devise a good trading plan. The number of days you can trade within a year can affect your ability to execute your plan and strategy. As such, it’s essential to know how many trading days you have in a year, so that you can make the necessary preparations to avoid unpleasant surprises and increase the effectiveness of your trading plan. If you want to improve your stock trading knowledge and skills, consider joining our seven-day RagingBull.com Bootcamp to get valuable tips from our accomplished trading experts.