Friday afternoon is for squaring up, not for new ideas

[Shadow Trader]

After the London close, liquidity falls steadily towards the weekend. Traders square positions, banks cut risk, and providers get cautious about holding anything over two days of closure.

On a chart, it can look like a calm drift. In practice, spreads widen gradually, fills get worse, and sudden jumps appear when a position is closed in a thin book.

The flow also has a flavour. Position squaring tends to reverse the week's dominant trend a little, producing small counter-moves late on Friday that confuse trend followers.

For scalpers, the question is whether the edge survives thinner conditions. Many find that results in the last two hours of Friday are noticeably worse than the rest of the week.

A plain check is isolating all trades after 3pm New York on Fridays and comparing them with the rest of the week. With enough history, the difference is clear.

Some drop the period entirely and treat it as a free afternoon.

What do the numbers say about Friday afternoon trades?