What the 4pm London fix does to price

[Shadow Trader]

Every day at 4pm London time, benchmark rates are set using trades executed in a short window around that time, roughly a minute on each side. Fund managers, index trackers and corporates who need to convert currency at the benchmark rate place their orders to execute inside that window.

Because those orders are large and clustered, price can move sharply in the minutes before the fix and then reverse once the window closes. The pattern is not guaranteed, but it shows up often enough that it has a name in dealing rooms: fix flows.

For a scalper, the lesson is mostly defensive. Positions opened at 3:55pm London, expecting a calm continuation, can get dragged through a burst of volatility that has nothing to do with the chart setup. End of month tends to be heavier, since portfolio rebalancing orders pile up.

Some traders deliberately fade the spike after the window closes. Others simply flatten before it. Both beat accidentally sitting through it.

Is the fix window marked on the charts people use here, or does it only show up as a surprise?