Trading the Tokyo session

Levels of support and resistance assist traders with opportunities to enter or exit trades. Combining this with signals from indicators further increase the probability of entering a good trade. With lower liquidity, none-Asian markets such as EUR/USD, GBP/USD and EUR/GBP are less likely to make large moves outside of generally observed trading ranges. An easy way to find out the current average pip range for a currency pair during the Tokyo session is to use our MarketMilk™ app. This shouldn’t be too surprising since the yen is the third most traded currency, partaking in 16.8% of all forex transactions. It is also important to take into account the local affiliation of the instrument.

This lesson will walk you through the nuances of this trading period – giving you the Tokyo forex market hours and ideal strategies to consider. Talking about the risks, it is important to mention that during low liquidity, usually when an Asian session opens, and after the close of the North American session, there is a certain risk when placing trading orders. During regular trading hours, the volatility is low and might increase only during some macroeconomic events.

What is the best time to trade Forex?

The absence of key economic hubs in Europe and the US for the most of the Tokyo session is a factor in the low trading volumes observed. For example, traders might expect that Sydney’s open will move only one hour back or forth when the US adjust for standard time. Traders must understand that seasons are opposite in Australia meaning that when time in the US shifts one hour backwards, time in Sydney will shift one hour forward.

It is important that traders focus on one of the three peak trading sessions, rather than attempt to trade the whole 24 hours in a day. The three peak trading periods are the Asian session, London session and Tokyo session. In addition, there are also sessions overlap where the market is most liquid and volatile hence they make the most ideal trading hours of the forex market.

City Index’s Singapore forex trading hours

The Tokyo trading hours usually do not represent high volatility because of the lower volume in comparison to European and North American sessions that are considered the most liquid. Many traders use it in their trading strategies like mean reversion or calm scalping. Usually, it is easy to spot those trading sessions alternate and when one Forex session closes, another one opens.

• This gets even more confusing because the day of the month when a country’s time may shift to and fro DST also varies.
• The current time zone is very populated in terms of involved countries and therefore involves a number of solid and liquid financial markets.
• Obviously, there are periods of the day where the open hours and the closing hours of the different trading sessions do overlap.
• However, liquidity doesn’t really show up until Tokyo opens a few hours later.
• The day of the month on which the official time of different countries changes due to the greater use of Daylight Saving Time also varies.
• The orders of the clients of these banks can be forwarded to the foreign exchange at any time during the 24-hour cycle.

As well as being a trader, Milan writes daily analysis for the Axi community, using his extensive knowledge of financial markets to provide unique insights and commentary. Milan Cutkovic has over eight years of experience in trading and market analysis across forex, indices, commodities, and stocks. https://www.bigshotrading.info/trading-room/ He was one of the first traders accepted into the Axi Select program which identifies highly talented traders and assists them with professional development. The first trading session to start the week is known as the Sydney session, even though the trading starts in New Zealand first.

When Can You Trade Forex: Tokyo Session

More liquidity can normally be seen instantly and traders often witness breakouts from established trading ranges. Also known as the Tokyo session, the Asian trading session is often overlooked as it isn’t as liquid and volatile as other major trading sessions. However, these characteristics are exactly why the Asian session can be attractive to those who know how to trade it. Among the most suitable hours for trading, there are definitely the first hours of each session. Professional traders usually claim it the best because of market activity and momentum.

This is the largest market in terms of liquidity and presence of various financial institutions like banks, hedge funds and the Federal Reserve being a Central Bank of the US. The majority of large international banks have offices all over the world (though operated under different local entities). The orders of the clients of these banks can be forwarded to the foreign exchange at any time during the 24-hour cycle. Self-confessed Forex Geek spending my days researching and testing everything forex related. I have many years of experience in the forex industry having reviewed thousands of forex robots, brokers, strategies, courses and more. I share my knowledge with you for free to help you learn more about the crazy world of forex trading!

The Sydney session has a slow and low fluctuation due to the low liquidity volume. But sometimes, despite the low liquidity volume, fluctuating movements can be seen in some symbols such as gold, etc. Taking into account the early activity in financial futures, commodity trading, and the concentration of economic releases, the North American hours unofficially begin at 12 p.m. With a considerable gap between the close of the U.S. markets and the open of Asian trading, a lull in liquidity sets the close of New York trading at 8 p.m.

Among the market participants, there are various banks, hedge funds, different financial companies, investment management firms, and many others. Next ones are the retail Forex brokers or some investors that have direct access to the Forex market due to very large trading volumes. There are four trading sessions but tokyo trading session three of these sessions are referred to as the peak trading sessions because they usually have the bulk of the volatility for every trading day. Therefore, the hours of these trading sessions is of great significance to forex traders to open trade positions rather than attempt to trade every single hour of the day.

Thus, we have reviewed the main Forex trading sessions, as well as the schedule of trading sessions. Now you know that the greatest volatility is observed during the European trading session, and at this time you can trade any major currency pairs. During the Us trading session, volatility is not so high, but it can grow sharply during the period of news related to the publication of economic reports in the US. During the Asian session, many currency pairs, with the exception of pairs with AUD, NZD and JPY, can move in a sideways range, so it is better for beginners to refrain from trading. The highest increase is observed trading at the close of the Tokyo and London sessions opening and closing the opening of the London and new York trading sessions. Moreover, not all branches of a certain big bank will do these large-scale cross-border transactions.

You should take note that the Tokyo session is sometimes referred to as the Asian session. However, liquidity doesn’t really show up until Tokyo opens a few hours later. FX Central Clearing Ltd (/eu) provides services to the residents of countries from the European Economic Area (EEA) only. Timing is a very important factor and a key strategic component in every aspect of life. The famous saying “To everything, there is a season” simply mean to do the right thing at the right time.