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Where Does the Day Begin in 24 Hour Forex and Futures Trading?

How do you set a proper 24 hour timezone when trading forex and futures markets?

When you look up and the sun is directly overhead in the middle of the day, it is night time for the other half of planet Earth. And don't imagine that's irrelevant. If you trade in the USA eastern standard time, EST, more than half the world's people, including India and China, are on the opposite side of the globe.

This means that traders across the world would be looking at different candlestick bars on their charts because their day starts and ends at a different time. If the high is set in the last few minutes of New York trading, European traders would instead include that price in their next day's chart. Pin bars would not necessarily look like pin bars to all observers. Better for your trading would be to use the timezone for charting purposes that most other traders use. Then you would be conveniently alerted to the same signals professionals see.

No existing timezones are suitable for charting

So which timezone makes the most sense to use? I am going to argue none of the standard timezones are optimal for trading 24 hour markets. Instead I will show you a new timezone, one that is widely used by many professional traders. I call it the FX24 timezone, named after FX for the forex markets. You can choose it here on this site as your preferred way to view the publish times of posts. Some trading software, such as most versions of MetaTrader, have FX24 built in. Our charts here, for weekly and shorter timeframes, all show times in FX24.

Like exiting an airplane after traveling east or west, adjusting to a new timezone takes some effort. But humans do it all the time and we're quite good at it. But first, let's look at what happens if you continue to use your local time to trade international markets.

The first thing you notice, depending on where your trading is based, is that the week does not start or end properly. In the USA, you will see the Sunday afternoon session, while in Australia, NZ and east Asia they will face a Saturday morning half day. Almost conveniently for Europe, the FX24 timezone comes within a few hours of their standard day that they are tempted to ignore it. Unfortunately their day is not close enough and they will not see the same candlestick bars that other traders see. Europeans will also have a few hours of Sunday night trading.

Which timeframes are affected?

The weekly and monthly timeframes will not be affected since for the weekly, all trading from Sunday until the next Saturday will be included in each bar. The bars will be the same worldwide until weekend trading starts sometime in the future. For timeframes less than one hour, such as the 15 minute, the same bars will print wherever you are located.

The one hour bars will also be the same for most of the world except for timezones that start on the half hour, such as India's. Depending on exactly when your timezone starts its day, the four hour timeframe may or may not look the same to other traders.

How to see the same bars that other traders use?

The two major financial centers in the world are in London and New York, five hours apart. That's too far for a happy compromise since it's late night in London when New York finally closes. But this hints at a solution.

Because we are referring to a 24 hour day and we do not want to talk ambiguously about am or pm, we need to be familiar with the 24 hour clock, or military time. This clock does not reuse the first twelve hours for the second half of the day, so 1pm becomes 13:00 hours and 5pm becomes 17:00 hours.

Let's review some USA close times. Equities on the NYSE close at 4pm (16:00) EST. Futures start to close from 16.30 EST with most closing by 16:45 EST. Except for equities, futures markets start to reopen after 5pm (17:00). The same is true for the interbank forex market where trading slows or stops in the last 15 minutes before 17:00 EST, then restarts after 17:00.

To make sense of the timezones we would like to follow the day that begins after the NY and Chicago (-1hr) commodity markets restart their trading session. The NYSE trades within that period, so starting the world trading day at 5pm (17:00) EST is the solution that most trading professionals use.

As an example, when trading stops just before 17:00 EST on any Monday, that is the end of the full 24 hour trading Monday which started 24 hours earlier on Sunday. So the Sunday afternoon session is really just the beginning of Monday trading and the candlestick for Monday includes all trades from 17:00 EST Sunday until the end of the FX24 day in NY at 17:00 Monday. Now, instead of six trading days in the week, we have the standard five: Monday to Friday. They just don't quite coincide with the same five days you are used to. However that's exactly the same for all people living east or west of you. Humans deal with that level of complexity all the time so we are not going to let this stop us from seeing proper charts.

The rest of the details here about UTC and DST adjustments are mostly helpful for programmers who need to implement FX24. Skip ahead unless you have a particular interest in the inner workings of timezones.

To make the trading day start at 17:00 EST, we need a timezone exactly 7 hours ahead of NY, where locally the time would be 12 midnight. That would be true whether daylight saving time (DST) is applicable or not because the NY markets close by 17:00 at all times of the year. If DST is not in operation, that would be the timezone two hours ahead of Greenwich Mean Time (GMT, also known as UTC), or UTC+2, since London is five hours ahead of NY. FX24 falls in and out of DST at exactly the same time as New York.

Unfortunately, DST complicates things immensely because UTC does not change when DST comes into effect. Also, the USA and Europe do not enter or leave DST on the same date. For this reason, we cannot define FX24 as being UTC+x, where x would be a fixed number of hours. We would need to define two timezones, one with and one without a DST adjustment. The DST transition times would simply borrow from ESDT.

FX24 - the 24 Hour Timezone for Traders

The easiest solution is just to define FX24 as seven hours ahead of the time on the east coast of the USA so that 5pm in NY is 12 midnight in the FX24 timezone.

The first thing to note is that this timezone does not coincide with any other single timezone. Instead, it moves between Moscow, Athens to Nairobi and back again, depending on the phase of DST in each country. This is strangely a good thing as it prevents any one timezone from chauvinistically beating its breast. No one country owns FX24, and it's equally inconvenient for all.

Secondly, it's within two to three hours of London time, close enough for one of the world's financial centers to try to ignore it. But ignoring FX24 results in six daily bars for the week, all of them different from traders located elsewhere.

If you want to see the same charts other traders are working from you need to adjust your trading timezone to the day starting seven hours ahead of the time in New York.

In some cases, the FX24 timezone is built into your trading software, such as the widely used MetaTrader (not all versions). In other cases the software may allow you to choose a timezone, but that only works if the FX24 timezone is available as a programmed in choice. Otherwise you will need to make adjustments to a suitable proxy timezone that lines up with FX24 at least two times a year, depending on DST in NY and DST locally in the proxy. That's a major pain. When all else fails, you can put pressure on the software providers to make them aware of the problem and fix their software.

As global markets become more and more intertwined there is no longer any excuse for trading software not to provide the FX24 timezone. It's just New York time plus seven hours.

If you prefer to see times of stories and posts displayed in FX24 here on PagooLABS, then simply go into the configuration menu and make your selection for FX24. The configuration menu is the little wheel icon on the top menu. You will need to be logged in of course, otherwise you will see UTC times. You can also choose any timezone you prefer if FX24 is too uncomfortable to use at this stage.

Swap over to FX24 and start enjoying the same charts other traders use!

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I am almost convinced but is there a difference between timezone and timeframe?

I could have made the difference between timezone and timeframe clearer in the story above. They are completely different animals that share a similar name.

Timezones are the north to south slices of planet Earth that share the same time offset from UTC. So the EST timezone in the USA is currently five hours behind UTC. All points within that timezone share the same wallclock time.

Timeframes on the other hand refer to the time represented by candlestick bars on trading charts. When a bar collects all the trades over a 5 minute time interval we say the chart is displaying the 5min timeframe (M5). The start of that timeframe is the open, the end of the timeframe is the close, the highest price printed in the five minutes is the high and so on. Similarly for the four hour (H4) timeframe which summarizes the OHLC bars over the four hours.

Timeframes are important in the story above only because some timeframes, such as M5, are immune to which timezone the trader is in while other timeframes, such as the daily, are very much affected by when the timezone starts its day.