How to Trade Forex During the Asian Trading Hours?
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Would you like to know how to trade forex during Asian trading hours? The Asian session is also known as the Tokyo session. This session is considered to be the prime time to start trading in the forex market.
Asian trading sessions are often overlooked due to their liquidity and volatility compared to the rest. However, it does have some unique characteristics for traders with extensive knowledge of forex.
Important features of the Asian forex session
Commercial banks and central banks are the major players in the Asian forex session. The reason is that Japan is heavily dependent on exports for its economic growth.
During Asian forex sessions, the liquidity can be thin, and currency pairs can sometimes stick within a specific range. There is a high likelihood that this condition will occur if the New York session follows a big move.
Compared to GBP/USD, movements in Asian currency pairs like NZD/USD and AUD/USD will be more powerful. This is because, in Asian trading sessions, most of the activity occurs in the early stages.
After the Asian trading session, a trader can predict the upcoming trade market activities to start a successful trading journey.
You can even trade with various currency pairs, but the selection is always determined by the trading strategy you are adopting.
When can you start trading in the Asian forex session?
In general, the Asian forex session begins at 23 GMT or 19 EST. The session starts from 23-8 GMT or 19-4 EST. The closing time is 4 EST or 8 GMT.
The Asian forex trading session is connected to Tokyo banks because Tokyo banks begin operating during these hours. Currently, they handle huge volumes of trades and have financial centres in New Zealand, Sydney, and Australia.
Note down the trading hours, and start your journey with the Asian trading session right now!
On which pairs you can trade during the Asian forex session?
During Asian sessions, a trade can trade on various forex pairs, including AUDUSD, USDJPY, and NZDUSD. In addition, you can use these pairs during nighttime forex trading.
If you are using a range strategy, you can start trading on any significant pair. However, for the trend trading strategy, look for the highly volatile forex pairs! This includes NZDJPY, AUDJPY, and AUDNZD.
US and European residents can also trade during the night by using Asian forex sessions.
Two-step strategy to trade forex during Asian trading hours
A powerful two-step strategy is followed with which you can smoothly start trading forex during Asian trading hours. Let’s explain to you a bit about this two-step strategy below:
Step one: Selecting the best currency pair to start trading on
Volatility will bring some great profit & loss opportunities. Although during the Asian session, the volatility is not that high, it still has some advantages for the trader!
Few major currency pairs traded during the Asian session are NZD/JPY, AUD/JPY, and AUD/NZD. Volatility is extremely low during 00:00 GMT because the American traders are very active during 12:00 GMT and 21:00 GMT.
To choose the best currency pair to trade, you can wait for the consolidation period, which starts from 22:00 GMT on the M5 chart time frame. During this period, the trade market stops itself and decides the next currency price for further trading.
Step two: Identification of trend and waiting for the breakout
Breakout is when a price moves outside the defined resistance or support level with the increased volume. You should choose a breakout in the direction of the trend because it lasts longer.
There is no need to panic if the breakout does not appear till 00:00 GMT. However, it might happen during the Asian trading session.
On a possible basis, the break of the range will take place during the Asian session. Thus, Fakeouts will happen quite seldom, but you should know that it exists.
How to avoid fakeouts during Asian trading sessions?
Double-checking is crucial to avoid any kind of fakeout during Asian trading sessions. Therefore, beginners should perform double-checks, especially when it comes to choosing currency pairs.
As we all know, the volume in the Asian session is relatively low. Therefore, once the candlestick breaks the range for the first time, you should never open a position. Instead, wait a few minutes and open a trade at the first price of the candlestick.
If the next candlestick has closed itself lower than the older one, a shorter position is opened below the previous one at 75.62.
Stop loss is positioned at 75.66, which is higher than the resistance trade level. Take profit is positioned at 75.47, which is higher than the support trade level.
What are the significant reasons to trade during Asian trading hours?
- When liquidity is low, non-Asian markets will avoid making some big trades outside the trading range. This includes EUR/GBP, GB/USD, and EUR/USD.
- Trade movements are shorter in comparison with other trade markets of London or the US. This is because the primary liquidity is arriving straight from Asia.
- Clear entry and exit point opportunities are available for the traders due to support and resistance levels. With this opportunity, a trader can increase its chances of winning a good trade.
- Asian trading hours are excellent for risk management. Traders can easily monitor their trades on a better scale to study the rewards and upcoming trade movements. Plus, it is easier to look for the stages of support and resistance within the Asian market.
- In addition, the Asian trading session offers a variety of currency pairs to trade. But the selection of currency pairs generally depends on the trading strategy you have adopted.
To end with the discussion, performing forex trading during the Asian forex session is something you can grab the currency pairs suitable for trading.
Traders are fond of Asian session because they grant straightforward entry and exit points, has low liquidity or volatility, and are suitable for conservative traders.
If you haven’t traded on Asian forex yet, start trading now!
Jason Morgan is an experienced forex analyst and writer with a deep understanding of the financial markets. With over 13+ years of industry experience, he has honed his skills in analyzing and forecasting currency movements, providing valuable insights to traders and investors.
Forex Content Writer | Market Analyst