Triple witching and what it does to FX

[Shadow Trader]

Four times a year, stock index futures, index options and single-stock options expire together. Equity traders call it triple witching, and volume in stock markets spikes. Forex is a separate market, but the effects can leak across.

Large equity flows can mean large currency conversions for international portfolios. Risk sentiment indicators swing around as index futures settle. Volatility in yen crosses and commodity currencies sometimes picks up, since those pairs often track equity moves.

For FX scalpers, the practical effect is usually modest, and it varies by quarter. What matters is awareness that on those Fridays, moves in equity indices during the New York afternoon can drag risk-sensitive pairs unexpectedly.

A quick check of whether performance on triple witching Fridays differs from other Fridays takes a few minutes with a tagged journal.

Worth remembering that the quarterly dates are known years in advance, so marking them in the calendar takes one minute.

Has triple witching made any noticeable difference to FX scalping results, and are those days handled differently?