There are several reasons you may want to set each cylinder of an engine to Top Dead Center (TDC) on the compression stroke (TDC on the compression stroke results in both the intake and exhaust valves being fully closed). Setting valve lash or performing a cylinder leak-down test are a couple.
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Step 1: Starting With the Basics
To use this method you will need a few hand tools. Your engine must have timing marks and a distributor. In addition, you must know how your engine's cylinders are numbered, The order your engine's distributor will fire those cylinders and the rotational direction of either the engine or the distributer.
First the timing marks:
These marks consist of two items, a line or pointer and a plate showing degrees before and/or after TDC. One of two will be on the engine the other on a balancer that attaches to the crankshaft.
Next the cylinder numbering:
The engine I am using is a Pontiac V8 the cylinders are numbered as follows; driver's side starting at the front most cylinder near the radiator counting back towards the firewall - 1,3,5,7. The passenger side starting at the front most cylinder near the radiator counting back towards the firewall - 2,4,6,8.
Then the firing order:
The firing order was cast into the original intake manifold 1-8-4-3-6-5-7-2.
This engine rotates CW and the distributer rotates CCW (only one of the two is needed but cross checks are always welcome).
Step 2: Modify the Cap
To use this tool you will need to see the rotor in relation to the terminal for each cylinder on the cap, while the cap is installed on the engine (in short; cut the top of the cap off). This cap has a nice parting line, in the right spot, to use as a cutting guide.
If the shape of the cap doesn't allow you to identify where each terminal is, mark the cap accordingly. This cap has an easily identifiable bulge where each terminal is.
Cutting the top off left a frayed edge and you don't want any of that falling into the wrong spot. A quick cleanup with a wire wheel and the cap is ready to use
Step 3: Cylinder Number 1 Is Not Always First
Rotate the engine by hand (ratchet and socket) until the timing marks are aligned at 0 degrees. With the timing marks aligned, this engine has the pistons in cylinders 1 and 6 at TDC. However, one is on the compression stroke and the other on the exhaust stroke.
Install the distributor cap and note the terminal the rotor is pointing to. The cylinder that corresponds to the terminal the rotor is pointing to is on the compression stroke (in the picture you will notice the rotor is slightly past the point where the terminal is, that is because this engine fires at 14 degrees before TDC. To avoid misjudging TDC on the remaining cylinders I loosened the distributor and aligned the rotor to the terminal, taking out the initial 14 degrees of timing).
It doesn't matter whether the rotor points to terminal 1 or 6 you can start with either.
Once you complete whatever you have to with that cylinder rotate the engine by hand, making sure you rotating the distributor the correct direction (CCW in this case). When the rotor points to the next terminal you are ready to work on the corresponding cylinder. Keep in mind the firing order to ensure you are working on the correct cylinder (e.g. if you started on cylinder number 6 - the next cylinder in sequence is number 5 (1-8-4-3-6-5-7-2). Continue one cylinder at a time until you are finished (two revolutions of the crankshaft which will result in one revolution of the distributor).
When finished don't forget, if you moved the distributor to take out the initial timing, reset initial timing.