Time According To Wall Street

A trader observing his or her own local time wants to know the corresponding number of elapsed price bars that he must first calculate to come up with the corresponding time in New York compared with his own time, the time elapsed since the 9:30 am ET market opening time, and finally, that elapsed time in bars. Active intraday traders often use charts based on five-minute price bar intervals. Given the local time, a spreadsheet can be constructed to read off the number of five-minute bars, or bars of any other time interval, that have elapsed in any time zone.

ELAPSED BARS IN ANY TIME ZONE
The trading day lasts six and a half hours. The first 30 minutes is six five-minute bars long and the remaining six hours correspond to 12 five-minute bars each. This makes the trading day 78 bars long when measured in five-minute bars. The spreadsheets in Figures 1 and 2 show how many price bars have elapsed in the Eastern and Pacific time zones, respectively. Local time advances from the 9:30 am market opening time toward the 4 pm market closing time in five-minute increments. The opening and closing times are shown in bold type, as are the hours in between.

Figure 1: Elapsed five-minute intervals as a function of local time (ET)

Figure 2: Elapsed five-minute intervals as a function of local time (PT)

When a spreadsheet is opened, the correct date and current time are shown under their respective column headings. The computer's system clock must be set to the correct local time. The number of five-minute price bars that have elapsed, corresponding to the current time, is then read from the column labeled five-minute bars. You can minimize the spreadsheet while performing other tasks. The current local time is refreshed by double-clicking it and then pressing the enter key. An Excel program to produce these spreadsheets is described in the sidebar, "Building An Excel Spreadsheet To Display Elapsed Market Time In Five-Minute Bars."

NOT AT THE COMPUTER? USE A WATCH
Measuring elapsed time in five-minute intervals is easily accomplished with a wristwatch equipped with a rotating bezel. Watches of this type are known as diver's watches. For a trader in the Pacific time zone, Figure 2 shows a watchface with the rotating bezel set to measure time in elapsed five-minute price bars for the NYSE and Nasdaq exchanges. In Los Angeles, for example, the market opening time in New York corresponds to 6:30 am local time. At 7 am, the market has been in operation for 30 minutes and six five-minute price bars have elapsed. The "6" on the bezel is set opposite the "7" on the face. The market closes at 1 pm Los Angeles time. It has been in operation for six and a half hours corresponding to 78 elapsed five-minute price bars. The 78 on the watch bezel appears opposite the "1" on the watchface.

Figure 3: Watch bezel set to read elapsed five-minute price bars (PT)

The minute hand can be used to read the number of bars "past the hour." For example, at 10:15 am in Los Angeles, the minute hand is on the "3" and the hour hand is on the "10." A total of 45 five-minute price bars (42 plus three five-minute price bars) have elapsed in New York.

To set the watch for any other time zone, just rotate the bezel so that the "6" is opposite the local time at which the market in New York has been in operation for 30 minutes. Some markets are open for more than the six and a half hour period of the NYSE and Nasdaq. The NYSE itself is reportedly considering opening a full two hours earlier. That would add another 24 five-minute bars to the current 78-bar trading day for a total of 102 bars. Because of these reasons, I have extended the numerals on the rotating watch bezel shown in Figure 3 beyond 78 by 12-bar increments for each additional hour of market operation. Eventually, all markets will trade electronically 24 hours a day.

INTRADAY CHART PATTERNS
Certain market events tend to happen at the same time each day, and referring them to elapsed bars instead of clock time helps to make such events stand out more clearly. In A Beginner's Guide To Day Trading Online, Toni Turner neatly summarizes these for the Eastern time zone. The key time periods of the trading day she identifies appear as follows when referred to as five-minute elapsed time bars:

Market opens
4-8 bars - First reversal period
11 bars ­ Slightly milder reversal
22 bars ­ Beginning of lunchtime moody blues
48 bars ­ Lunchtime moody blues begin to cheer and clear; some stocks start to edge up
60 bars ­ Stocks break out (or down) in a more definitive manner
66 bars ­ Treasury bonds stop trading; market breathes a sigh of relief; possible reversal
72 bars ­ Mild possible reversal
78 bars ­ Market closes

Vince Heiker has extensively studied market cycles. His spreadsheet, "Nasdaq Daily Time-Cycles Guide," should help you determine market time for you.

SUMMARY
Whether you use a spreadsheet or a watch or both, being cognizant of daily market events can help you make better trades. This is true no matter what time scale you trade in and what markets you choose to trade. Note recurring market events on your spreadsheets. If you use a cell phone, PDA, or other wireless device to keep in touch with your broker, use your watch to keep an eye on how many price bars of the trading day have elapsed. So watch the time and good trading!

Edgar A. Kraut is a private trader. He can be reached at ed_kraut@yahoo.com.

SUGGESTED READING
Heiker, Vince. "Nasdaq Daily Time-Cycles Guide," tachyonv@earthlink.net.
Turner, Toni [2000]. A Beginner's Guide to Day Trading Online, Adams Media Corp.

SIDEBAR: Building An Excel Spreadsheet To Display Elapsed Market Time In Five-Minute Bars
(This example assumes the computer's clock is set for the Eastern Time Zone)

Steps
1.Bring up a new Excel File.
2.Enter: Date, Current Time, Time Zone in cells A1, B1 and C1, respectively.
3.Select: Format, Column, AutoFit Selection, for each Column.
4.Enter: =TODAY(), =NOW(), EDT, in cells A2, B2, and C2, respectively.
5.Enter: Market Opens(Local Time), 5-Minute Bars, in cells A3 and B3.
6.Select: Format, Column, AutoFit Selection, for each Column.
7.Enter: 9:30 AM and 0.00 in cells A4 and B4, respectively.
8.Enter: 9:35 AM and 1.00 in cells A5 and B5, respectively.
9.Select cell A4, Format Cells, Tab(Number), Category(Time), Type(1:30 PM).
10.Select cell B4, Format Cells, Tab(Number), Category(Negative Numbers), Type(-1234.10), Decimal places(2).
11.Select cell B4, Format Cells, Tab(Alignment), Horizontal(Right(Indent)) (0).
12.Select cell A4, Format Cells, Tab(Alignment), Horizontal(Right(Indent)) (0).
13.Repeat Steps 11. and 12. for cells A5 and B5.
14.Highlight cells A4 and A5, drag down to Autofill to 4:00 PM in cell A82.
15.Highlight cells B4 and B5, drag down to Autofill to 78 in cell B82.
16.Make cells A4, B4, A10, B10, A22, B22, A34, B34, A46, B46, A58, B58, A70, B70, A82, B82, Bold
17.Save this Spreadsheet as ET.xls

Usage
This spreadsheet opens with the Date and Current Time in the ET time zone. In the Eastern time zone, the NYSE and NASDAQ markets open at 9:30am and operate for six and a half hours, closing at 4:00 pm. The Clock Time, and Elapsed Time (measured in five-minute bars) relative to the market opening time are shown in column A (rows 4 to 82), and column B (row 4 to 82), respectively. To see how many bars have elapsed since the market opened, double click cell B2 and press enter to show the current time. Read the corresponding number of five-minute bars that have elapsed from column B.

Modification For Other Time Zones
(Pacific time zone example)

Steps
1.Set the computer's clock to read the correct local time in the Pacific Time Zone.
2.Note that 9:30 AM ET corresponds to 6:30 AM PT.
3.Change cells A4 and A5 to 6:30 AM and 6:35 AM, respectively.
4.Highlight cells A4 and A5 and drag down to 1:00 PM in cell A82
5.Save the modified spreadsheet as PT.xls

Notes
1.For states that follow the same convention with regards to changing between standard time and daylight savings time, the relative time offsets are fixed. For states that remain on the same time all year around, the local time offset changes when New York switches from standard to daylight savings time.
2.A convenient way to use the spreadsheet is to minimize it to the system tray. This frees the computer for other tasks. In order to check the evolution of the market in five-minute bars, Restore the spreadsheet and determine the current local time by double clicking cell B2 and pressing enter. Then, read the number of five-minute bars that have passed since the market opened from column B.

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