Time zones and retail investor behavior

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Silly Wabbit
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Time zones and retail investor behavior

Post by Silly Wabbit »

Is retail investor behavior affected by their time zone's offset relative to the exchange?

For example - in the US, west coast investors have fewer afternoon hours when the market is open to trade in. This may reduce trading activity and the resulting costs.

The effect would be even stronger in Hawaii, 6 hours behind eastern time, where markets are open from 3:30 am until 10 am local time.

Has anyone seen research on this?
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pokebowl
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Re: Time zones and retail investor behavior

Post by pokebowl »

Silly Wabbit wrote: Fri May 14, 2021 3:23 pm Is retail investor behavior affected by their time zone's offset relative to the exchange?


I've lived and worked all over the pacific ring of fire. The time differences have never impacted myself or my friends and coworkers who also trade. You just adjust accordingly. When I lived in Hawaii, I simply looked at the markets and placed trades prior to going into work in the AM. Hawaii also doesn't observe DST so it was not always 6 hours behind eastern time. :wink:

As an anecdote, three of my coworkers here in Alaska are semi-day traders using Robinhood, the 4 hour/5 hour difference in market hours doesn't appear to impact them in the slightest. They can still buy and sell their Gamestop and AMC options with ease.
JackoC
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Re: Time zones and retail investor behavior

Post by JackoC »

Silly Wabbit wrote: Fri May 14, 2021 3:23 pm Is retail investor behavior affected by their time zone's offset relative to the exchange?

For example - in the US, west coast investors have fewer afternoon hours when the market is open to trade in. This may reduce trading activity and the resulting costs.

The effect would be even stronger in Hawaii, 6 hours behind eastern time, where markets are open from 3:30 am until 10 am local time.

Has anyone seen research on this?
Pokebowl's response makes sense to me for retail investors who have already taken an interest in frequent trading. Same as professional US market participants stationed on the west coast, or on the east coast but participating directly in European or Asian markets: they shift their working hours.

And, for some levels of interest/frequency of trading, but also an unrelated day job, it could actually be more convenient to place the trades outside normal working hours.

Also, major US futures contracts trade 23/5 so time zone is less important if that's your interest.

I could envision a category of people who are less likely to get interested in trading in the first place because US cash markets are open at relatively odd hours where they live, but then you'd also have the first three categories. And if 'increasing costs by trading' comprises a few trades a week or month (albeit 'unnecessary' trades from a doctrinaire BH POV), how much difference does it really make in a person's inclination to do those few trades if most conveniently done before work in the morning? So I've seen no specific research but I doubt there be would much to find.
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JoMoney
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Re: Time zones and retail investor behavior

Post by JoMoney »

My "behavior" is modified in that I sometimes drive to work in the dark on the west coast to accommodate people on the east coast starting earlier in the day. Then I leave work earlier too ;)
"To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks." - Benjamin Graham
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goingup
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Re: Time zones and retail investor behavior

Post by goingup »

It’s an interesting idea to ponder. A West coaster can trade at 6:30 am, before work and get their last trades placed during their lunch hour. :wink: With mobile apps, I think the motivated trader will get it figured out no matter the time zone.

It wouldn’t surprise me to learn that East coasters are more avid traders, perhaps having more to do with culture than opportunity. I’m not aware of any research on the subject.
Karamatsu
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Re: Time zones and retail investor behavior

Post by Karamatsu »

Our situation here in Japan is about as extreme as you can get, currently 13 hours ahead of US Eastern time. Professionals can and do start their work day in the evening in order to be on hand for the open at 22:30, but for those of us who work (at most other endeavors) for a living, it the time difference has a big effect, which is even more pronounced after the time change, when we're 14 hours ahead and US markets open at 23:30. Since the time to get up is locally fixed (and quite early) there's only so much a person (especially a frequent trader) can justify doing without lack of sleep affecting their day job. So given that there is a visible effect in this extreme condition, it seems likely that there would be a gradually decreasing effect as you approached US timezones, then from there across the country to the Eastern zone, but I've never seen any research on the question. It's likely that the data simply aren't available outside of the brokerage houses, who are the only ones who would have access to their customers' IP addresses or (back in the old days) caller ID. The exchanges would have no way to know unless submission of the data is a regulatory requirement.
lazynovice
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Re: Time zones and retail investor behavior

Post by lazynovice »

When I lived in CST, the market was open from 8:30 to 3:00. Smack in the middle of my workday. Most days I really did not notice the market. Using mutual funds made far more sense. I could have placed orders at lunch but it was just easier to place orders at night.

I moved to MST a few years ago and the market is open 7:30 to 2:00. I can place a trade before leaving for work if needed. I can still do so at lunch. I am more likely to buy ETFs now- not just for this reason alone. It has not made me a more frequent trader. I still deposit (buy) once or twice a month.

That is the main difference I can think of for me.
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HyperCat
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Re: Time zones and retail investor behavior

Post by HyperCat »

It seems the implication of the original post is that trading is harder farther west, but I would argue the situation is worst for those on the east coast. What is one supposed to do with the market open from 9:30 to 4 with a 9-5 job? I've often wondered about this but haven't seen any studies.
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ram
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Re: Time zones and retail investor behavior

Post by ram »

I do not know about trading but I do know that people in Banglore, India who work for US companies at US work hours work through the night and go to the bar at 6 AM to have a beer. (Edit : Pre COVID)
For one of our research projects that lasted 3 years we had researchers at 10 locations from Israel (late evening) to Hawaii (early morning) and there was no problem with attendance at live phone/web based meetings. People adjust to what is required. ( based on the small sample size that I know personally)
Ram
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