In a stock exchange, the closing bell is a signal that the trading session for the day has ended, and that all of the traders of the floor must cease doing business until a new session is reopened. It is often used metaphorically to refer to the end of a business day. Not every stock exchange specifically uses a bell to signal the end of daily trading, but the term is fairly universally understood in the financial world. In stock exchanges which still use a bell to signal the end of the trading day, an opening bell is also rung at the beginning of the day to indicate that the stock exchange is open for business.
The floor of a stock exchange can sometimes get extremely chaotic, especially when the market is in wild fluctuation. The use of a loud signal such as the closing bell ensures that all traders stop doing business simultaneously. When a financial market is heated, doing business after the close of the day could be turned to a trader’s advantage, if he or she can get away with it. Typically, a warning bell is rung before the closing bell, to alert traders to the fact that the market is about to close.
In cases where a physical closing bell is not used, other loud noises or flashing lights are used to attract the attention of traders. Monitors on the floor are supposed to watch for traders who might be attempting to pull last minute deals after trading for the day has ceased. Once trading for the day has stopped, traders typically still must file paperwork and deal with other administrative tasks to ensure that they are ready for the opening bell the next day. On Fridays, when the closing bell signals the start of a weekend, the mood on the floor can become jubilant when the closing bell is rung.
The New York Stock Exchange, one of the most famous stock exchanges in the world, still uses a bell to signal the start and stop of trading. American television and radio shows which focus on investments often use the term “closing bell” to refer to the end of the trading day, and some shows which offer daily roundups of investment information are called by some variation on “closing bell.” Ringing the closing bell in the New York Stock Exchange is considered to be a great honor, and it is not unusual to see a politician or other notable figure symbolically closing the trading day.