Why Friday afternoon deserves its own rules

[Shadow Trader]

Liquidity drains steadily through Friday as European desks go home and New York participants reduce risk before the weekend. Spreads creep up. Price action becomes jumpy, with small orders moving the market more than they should.

There is also weekend risk. Positions held through the close are exposed to news with no ability to react. For scalpers, this is rarely the plan, but trades that go wrong at 4:30pm Friday often get left open out of reluctance to take the loss.

Month-end Fridays add extra flow, and the last Friday before major central bank meetings tends to be quiet and then erratic.

Many scalpers treat Friday after about 11am New York as a reduced-size or no-trade period. The cost of sitting out is small. The cost of one bad Friday afternoon can cancel a week.

A simple filter in the trading plan, such as no new entries after a fixed Friday time, removes the temptation.

What are the Friday rules here, if any?