Thursday, May 17, 2007

Bicoastal Trading…or Are You Trading in the Right Time Zone?

Last week I had a chance to trade on both coasts of the United States. Even though I grew up on the East Coast, I must say that I am more enamored with the manner in which the West Coast trading day fits into my life than the East Coast variant.

Assuming that you are trading NYSE hours of 9:30 to 4:00 ET, here the pros and cons of each time zone, at least as I see them.


East Coast / ET

Pros
  • Anything that happens overnight can be fully digested before the market opens the next morning
  • No need to bother to check with Asia or do any homework before you go to sleep
  • If desired, you can easily put in 3-4 hours of preparation time before the market opens
  • Working hours are closely correlated with those of your friends and family
Cons
  • If you have all that time after waking and before the market opens, there is a tendency to think you need to fill it up with research and analysis
  • After hours trading, West Coast earnings conference calls, and other end of day activities can easily screw up dinner plans
  • The market seems like it is open all day long
  • If you hope to trade in addition to another full-time job, there is too much time overlap for intra-day trading

West Coast / PT

Pros
  • The market closes at 1:00 p.m., so if you manage your time (and investments) well, you can have many of those afternoons off
  • After hours trading and earnings conference calls are a breeze – and still leave you with half of the afternoon free
  • Because of the lack of extended morning preparation time, there is a greater tendency to watch and wait during the first half hour the markets are open, rather then rush to open positions
  • A part-time trader can get at least 1-2 hours of live market action in before going to work
Cons
  • No sleeping in
  • If you have to commute anywhere, you are forced to become part night owl
  • Either you get up really early or (perhaps ‘and’) you must check on Asia and Europe each night before you go to sleep
  • There is no guarantee that you can absorb all the relevant information and formulate a solid trading plan in the time available before the markets open

The Solution?
Since I started trading full-time, I have often thought that the perfect time zone to trade in was Mountain time. Jackson Hole? Telluride? In theory, at least, this would provide a good balance between having the necessary morning preparation time and the opportunity to take the better part of the afternoon off after the markets are closed for skiing, hiking, mountain biking or whatever the local environment offers. Since I mentioned Jackson Hole, Wyoming has an extremely advantageous set of tax laws (save property taxes) too.

For now I’m staying in the San Francisco Bay Area, getting up early, and paying a 9+% state income tax. Every afternoon I have off, though, I thank my lucky stars and try to spend my geography dividend.

8 comments:

I.L. said...

For an international perspective on that, I mainly trade with New York and I'm based most of the time in Morocco where the NYSE trading hours are 1:30pm to 8pm which I kind of like because i can either take the morning off and do something fun or do extensive research. It still leaves enough time in the evenings to have a social life. When I am in Paris though, the hours (3:30 pm to 10pm) kind of suck.

MIsstrade said...

Amen, I moved out west in 2001 and don't miss EST. PST rules, I got up @ 5 am on EST and had to wait for 4.5 hours to trade. Here I wake @ 4 am, trade and ski and tee by 1pm. Doesn't get much sweeter than the PST in my eyes.

pleadership said...

In Chile during the summer here the market hours are 11:30am to 6pm, and in the winter it reverts back to New York time. I hate the late morning start at 11:30. I prefer the early hours like you have on the west coast...consider yourself lucky.

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