Reconstructing daily candles

Beginner Questions
1

When you trade by daily candles (or by any other timeframe), usually the systems tell you to act when a candle closes. With my broker that is in the middle of the night when I would usually prefer enjoying good sleep. So I got this idea: I download hourly data from my broker into a text file and programmatically reconstruct the daily candles so that each day ends in a decent time, like in the morning. I loose the details in the charts, but can analyse the data otherwise quite easily with a small piece of software of my own and get the signals I’m looking at.

Some questions have come into my mind, though:

Does anybody have any experience about the “best” timing of the daily candles by any criterion? The candles might look a bit different depending if they close in the middle of silent or hectic trading. I don’t think that wouldn’t make any difference in long-term trades, but how about positions that are open a few days at most? There are brokers out there that have quite varying closing times of daily candles, and this question is quite much like asking if there is some essential difference between them in this matter.

How should I deal with the start and end of the week? If a candle ends at 6 AM, say, should I end Friday at the end of the normal trading day or Monday at 6 AM? And how about Monday: should I include the hours before 6 AM in Friday’s candle, make a separate Sunday candle, or include all Monday up to 6 AM on Tuesday on Monday’s candle?

And lastly, I wonder if someone can throw in any good argument why not to do this kind of candle reconstructing. Does this make any sense at all?

J.

2

The key with any kind of end-of-period analysis is to be consistent with your period. The patterns you see may be slightly different at any given specific time, but in general you will see the same types of patterns developing in your timeframe as you would in a more standard one.

3

Thanks for the comment! I think I’m going to use my idea with the following principles: I reconstruct the candles every day at a fixed point of time (6 AM). The Monday candle will take all hours of Monday + up to Tuesday 6 AM. Friday will end as a normal Friday, but I trade it only on Monday morning. So there are a few hours of trading time between the Friday closing signals and trading them on Monday, and I might have missed some of the signals, but that’s not a big problem. On the other hand, this way I skip the first hours of the week that may not be the best ones for trading, and some of the Friday signals may still be quite valid or even more in my favor.

J.