Overlap fade: what happens when London leaves the building

[Shadow Trader]

The London and New York overlap is the busiest part of the day, with some of the best liquidity and tightest spreads. When London closes, around 11am New York time, the character of the market changes quickly.

Volume drops, spreads edge up, and the momentum that carried the morning often fades. Moves that looked strong sometimes reverse as London traders square up their books.

Many scalpers notice a pattern in the final hour of the overlap. Trends that were clean can turn choppy, and breakouts fail more often. Stops placed at the extreme of the London move can get raided as the thinner New York session takes over.

The adaptation is straightforward. Reduce expectations for continuation after the London close, shift toward range-based setups, or simply stop trading and lock in the day's results.

A useful trick is to chart the average range per five-minute block across the overlap and look at where it falls. On many pairs the decline starts a little before the London close, since traders begin squaring positions early. Setting a firm end time for momentum strategies a few minutes before that point can protect profits made earlier in the session.

Does the end of the London session change the way your setups behave, and if so how?