When to Trade Foreign Exchange: Tokyo Session

The trading day actually starts on Sunday evening at 5:00 EST for traders who reside in Murica (also known as "America") (10:00 pm GMT). Liquidity, however, doesn't truly manifest itself until Tokyo opens a few hours later.

June 29, 2022 - 11:06 AM 274 views

When to Trade Foreign Exchange Tokyo Session

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The trading day actually starts on Sunday evening at 5:00 EST for traders who reside in Murica (also known as "America") (10:00 pm GMT). Liquidity, however, doesn't truly manifest itself until Tokyo opens a few hours later.

Asian currency trading begins at 12:00 GMT with the commencement of the Tokyo session. You should be aware that the Tokyo session is also known as the Asian session on occasion.

Japan is the third-largest forex trading hub in the world, which is something to keep in mind. This shouldn't come as much of a surprise considering that the yen represents 16.8% of all FX transactions and is the third most traded currency.

Approximately 20% of all forex trading volume happens during the Asian session overall. But it's not all coming from Tokyo. Other significant financial hubs can be found in Asia, including Singapore and Hong Kong.

It's noteworthy to note that Singapore and Hong Kong now account for more forex trading volume than Tokyo.

Japan made up 4.5 percent of the total volume, while Singapore and Hong Kong each made up 7.6 percent. Perhaps the "Asian session" would be a better choice than the "Tokyo session"?

The major currency pairs' pip ranges for the Asian session are listed in the table below.

PAIR

TOKYO

EUR/USD

56

GBP/USD

54

USD/JPY

30

AUD/USD

65

NZD/USD

58

USD/CAD

39

USD/CHF

40

EUR/JPY

57

GBP/JPY

72

AUD/JPY

65

EUR/GBP

23

EUR/CHF

 

These pip values were computed using historical data averages. Keep in mind that these are NOT ABSOLUTE VALUES and that they might change based on market factors such as liquidity.

Additionally, because the Swiss franc was tied to the euro at 1.2000 throughout that time, the session range for EUR/CHF was left out.

Use MarketMilkTM app to quickly determine a currency pair's current average pip range during the Tokyo session.

Here is an illustration of the EUR/USD average pip range.


The Tokyo session will have the following major features, which you should be aware of:

Not just Japanese coastlines are experiencing action. Other financial hubs like Sydney, Singapore, and Hong Kong also see a tonne of forex transactions.

Commercial businesses (exporters) and central banks make up the majority of market participants during the Tokyo session. Keep in mind that China is a significant trade partner and that Japan's economy is highly dependent on exports, therefore there are numerous transactions occurring every day.

Sometimes liquidity is exceedingly thin. Trading during this time will occasionally be like fishing, where you may have to wait a very long time before receiving a nibble.

As compared to non-Asia Pacific currency pairs like GBP/USD, it is more likely that you will observe bigger moves in Asia Pacific currency pairs like AUD/USD and NZD/USD.

Most pairings may remain in a range during those periods of low liquidity. This offers chances for short-term day trades or later-day potential breakout transactions.

Early in the session, when more economic data is revealed, is when most of the action happens.

The actions taken during the Tokyo session could determine how the day will go. To plan and assess what techniques to employ in subsequent sessions, traders will review what transpired during the Tokyo session.

Typically, the Tokyo session may witness consolidation following significant swings in the preceding New York session.

Which Pairs Are Best for Trading?

This gives a fantastic opportunity to trade news events since the Tokyo session is when news from Australia, New Zealand, and Japan is released.

Additionally, given the volume of yen currency changing hands as Japanese businesses conduct business, there may be more fluctuation in yen pairings.

Be aware that because China is a global economic force, any news from China tends to cause erratic market movements.

Given how significantly Australia and Japan rely on Chinese demand, we might see further fluctuation in the AUD and JPY pairs when Chinese data is released.

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