Hi!
Feel very dumb for asking this but can’t get my head around it. I am using a Pivot point indicator where I can chose to have a gmt offset. I live in a country where we follow GMT + 1 time - but would I not just screw the value of the indicator up if I adjust the timezone?
I guess one should use the same data as everyone else.
Does anyone know what I mean and could enlighten me? Thanks!
Hi Ben,
Your noob question is not dumb. In fact, it is quite perceptive.
The short answer to your question is:
If your pivots are based on the H1 time-frame, or any time-frame lower than H1, then platform server time does not affect the values computed in your pivot indicator.
On the other hand, if your pivots are based on any of these time-frames, H2, H3, H4, H6, H8, H12, or Daily, then your platform’s server time matters – but maybe not enough to worry about, as we will explore in the “long answer”.
Here’s the long answer:
If you are using Pivots on the 1-hour (or lower) time frame, then your platform’s server time does not matter.
Every platform in the world closes its one-hour candle (and simultaneously opens a new one-hour candle) at exactly the same moment in time – hour after hour, and day after day. Therefore, the O-H-L-C data collected from the one-hour period that just closed, and projected into the one-hour period that just opened, is the same (plus or minus, depending on broker BID and ASK prices) for every platform in the world.
This applies, as well, to all of the lower time-frames. Every platform in the world opens new m1, m2, m5, m10, m15, m20, and m30 candles at exactly the same moment in time.
If you are using Daily Pivots (the most commonly used pivot time-frame), then each daily period will open and close on the calendar date determined by your trading platform. In most cases, this calendar date is your broker’s server time. If the server is located in eastern Europe (as most MT4 servers are), for example, then daily pivots will be calculated on a “day” which begins at 2200 GMT, which is midnight in the GMT+2 (eastern European) time-zone.
Many broker servers are set to open/close daily candles at 5 pm New York time, which is 2200 GMT in the winter (when the New York time-zone is GMT-5), and 2100 GMT in the summer (when the New York time-zone is GMT-4). The typical daily ebb and flow of forex trading volume favors a “forex trading day” that begins and ends at 5 pm New York time. This end-of-day time is used not only by U.S. brokers, but also by many brokers in other countries.
Let’s say that your pivot indicator uses the calendar day in the GMT+1 (central European) time-zone as the basis for determining the O-H-L-C prices from which pivots will be calculated. That is, on your platform, the period for Daily pivots will open and close at 2300 GMT (midnight in the GMT+1 time-zone). Technically, this misses the desired 5 pm New York time (2200 GMT) by one hour. But, does that really matter?
Purists might argue that it matters.
But, I argue that 2300 GMT (6 pm New York time) is just as good as 2200 GMT (5 pm New York time), because the hour between 5 pm and 6 pm (New York time) is typically the slowest (lowest volume) hour of the forex trading day. So, there isn’t enough difference between the pivots calculated based on 5 pm, and the pivots calculated based on 6 pm, to matter, in my opinion.
If you are inclined to do so, you can test this for yourself, by comparing (1) daily pivots based on a trading day which begins/ends at midnight in the GMT+1 time-zone (6 pm New York time), and (2) daily pivots based on a trading day which begins/ends at midnight in the GMT+2 time-zone (5 pm New York time).
Lastly, the time-frames H2, H3, H4, H6, H8, and H12 (all evenly divisible into the 24-hour day) are sychronized with the Daily time-frame, in all trading platforms. That is, each of those lower time-frames will open at the same time that the Daily time-frame opens. Therefore, if your Daily pivots (based on your GMT+1 time-zone) are acceptably close to the “standard” 5 pm New York Daily pivots, then your H2 through H12 pivots (if you use those) will be close enough to the “standards”, as well.
What an amazing reply. Thank you for sharing your knowledge - very much appreciated!