What it means
Stock prices move with the company's results, news about it, its sector and the mood of the whole market. US stocks trade mainly from 9:30 am to 4:00 pm New York time, with thinner pre-market and after-hours sessions.
In practice
Stock traders look for companies with a reason to move, such as earnings, news or strength in their sector, and enough daily volume to get in and out easily. Longer-term investors buy shares for the growth of the business and its dividends.
Most shares follow the overall market to some degree, so many traders check the direction of the main index before taking a trade in an individual stock.
What to watch for
A stock can open far above or below the previous close after earnings or news released outside trading hours. A stop-loss does not protect against that gap: it fills at the first available price.
Related terms
4 terms- IndexA single number that tracks a basket of stocks, like the S&P 500 or the Nasdaq-100.
- ETFA fund that trades on an exchange like a stock and tracks an index, sector, commodity or theme.
- EarningsA company's quarterly results; the forecast for next quarter (guidance) often moves the stock most.
- Pre-market and after-hoursThinner stock trading sessions before 9:30 am and after 4:00 pm New York time, with wider spreads.