When Is The Right Time To Trade Forex? A Look At Tokyo Session

The Tokyo forex session opens at 12: 00 AM GMT, which heralds the start of the session in Asia.

Bear in mind that the Tokyo sessions is, on several occasion, described as the “Asia session”, considering that Tokyo is the financial powerhouse of Asia.

One thing that must not go unmentioned is that Japan towers as the third most active forex trade centre in the entire world.

Are you surprise? You shouldn’t because; the Japanese Yen comes third as the most traded currency, covering a total of 16.50% of all forex dealings. Overall, more than 21% of all forex transactions occur during this session.

Below is a tabular representation depicting the pip range of the major currency pairs that make up the Asia session.

We arrived at the values of the pip above by making use of the averages of previous data. Remember that these values are not absolute and can differ, subject to liquidity and such other market circumstances.

In addition, the session level for EUR/CHF is not included in the above-mentioned values, because during the period, the Swiss franc has been pegged at 1.2000 to the euro.

Below are some features of the Tokyo Forex session

  • Activities are not only restricted to the shores of Japan. Large proportions of forex transactions are done elsewhere such as in Singapore, Hong Kong and Sydney.
  • The major participants active during the Tokyo session are companies, mostly those in the export business, and the Central Banks of different nations. Don’t forget that the Japanese economy is an export-driven market, and with China acting as another key player, there is always a large volume of transactions going on every day.
  • Sometimes, liquidity can be very thin, and trading during such times will be like fishing in a wide river where you might have no choice but wait for only-God-Knows-when till you get a nibble.
  • It is highly probable that you will witness more efficient moves in Asia Pacific currency pairs such as NZD/USD and AUD/USD, as against what is attainable with non-Asia Pacific pairs; e.g., GBP/USD.
  • During the periods of slim liquidity, the majority of the pairs are likely to remain glued within a particular range. As a result of this, a window of opportunities becomes available for short day trades or possible breakout trades for the remaining parts of the day.
  • Most of the business dealings and such trading actions in the session occur early when additional economic data is released.
  • Activities in the Tokyo session are capable of setting the mode for the remaining parts of the day. Participants in subsequent sessions will look and review the events that occurs in the Tokyo session with a view to help organise and plan what strategies they need to employ in other sessions.
  • Fundamentally, after high activities in the preceding New York session, chances are you may witness consolidation during the operation of the Tokyo session.

Which of the pairs are you supposed to trade?

Considering that the Tokyo session starts only when news from Japan, Australia and New Zealand comes out, this opens a favourable opportunity to trade and benefit from news events.

In addition, as companies from Japan are conducting business transactions, a lot of Yen would be changing hands, hence the possibility of more movement in Yen pairs.

Pay attention to the fact that China is also another economic “Nephilim”, hence whenever there is news from the ‘Red Dragon’, it is likely to generate volatile movements.

With Japan and Australia heavily reliant on Chinese demands, we could witness more significant movement in JPY and AUD pairs when data from China comes in.

That said, it’s time to unravel how you can trade the London session.

Let’s go brethren!

  • BrokerEUR/USD
    Core Spreads 0.6pips (variable) margin: 3.33%
    LCG 0.3pips (variable) margin: 3.33%
  • Back to top