The 4pm London fix: a ten minute cloud over everything

[Fairman]

The 4pm London fix: a ten minute cloud over everything

Benchmark fixing time is when a lot of month-end and client orders get executed at a reference rate. The window around 4pm London sees dealers squaring books before and after, and the flows can push prices sharply in either direction without any news behind them.

Most scalpers notice it only as a strange wobble: a sudden two or three pip move in EURUSD or GBPUSD, then a partial retrace, then calm. The chart looks like noise because it basically is, from a technical point of view.

Anyone trading short term momentum around that time gets chopped. Anyone trading reversion gets the better odds, though the sizing has to account for the occasional runaway move on month-end days.

A simple test: mark 3:50 to 4:10pm London on the chart for a month, and see how the usual setups behave inside the box versus outside it. The difference tends to be striking.

A hint for the sceptical: the pattern is easiest to see on month-end days, when benchmark flows are largest. A chart of the last five month-end afternoons, with the fix window shaded, usually shows one or two clear examples of sharp moves that retraced within minutes.

The practical consequence for a scalper is about stop placement. A tight stop inside the fix window is likely to be hit by noise, and widening it for those twenty minutes or standing aside entirely both beat getting chopped.

It also helps to think about direction. The fix does not have a built-in bias. Some days the flow is for the dollar, some days against. Trying to guess the direction is a coin flip, while recognising the extra volatility is a sure thing.

A simple record helps: after each fix window, jot down the move in pips and whether it reversed within thirty minutes. Twenty entries make a pattern that no amount of reading can provide.

Does the fix window show up in your results, and do the setups behave differently inside it?