April 12, 2021 | AtoZ Markets – Today, we will discuss the Tokyo trading session. Even though we call this session a Tokyo trading session, it does not just talk about Japan. We can also refer to it as the Asian trading session since other Asian countries are also involved.
The Tokyo trading session
The Tokyo trading session starts at 12:00 in the morning, GMT. Again, it does not necessarily mean Tokyo, Japan alone, but also other countries in Asia. We cannot necessarily see how liquid the trading is until the Tokyo session opens, even when the New York session or North America session opens at 5:00 in the evening EST, Sunday night. That is 10:00 in the evening, GMT.
Forex trading in Asia
The Asian session generates more or less 20% of the total forex trading volume. Furthermore, Japan is in the top three when we talk about the world's biggest trading center. However, it is not all on Japan because massive trading volume comes from Hong Kong and Singapore. If we look at the percentage of trading volumes, we can see a noticeable difference between the 7.6% of what Hong Kong and Singapore bring and the 4.5% of Japan.
Some things worth noting about Japan and the Tokyo trading session
Exports massively contribute to Japan's booming economy and China, bringing massive trading volume in a single day. Commercial companies that do the exporting and central banks play a significant role in Japan and Tokyo trading sessions. It is now evident that forex transactions do not only come from Japan, where the trading session got its name. We also have Syndey, Hog Kong, Singapore, and more.
Currency pairs from the Asia Pacific tend to be more aggressive than those that do not come from the Asia Pacific.
How liquid is the Tokyo trading session?
The liquidity is not that much. Patience is a must as it might be a long while before hitting something. If the liquid is thin, then the pairs stay in a range. Thin liquidity means opportunities and possible breakout trends that short-day traders can take advantage of later.
Happenings around the Tokyo trading session
Some traders evaluate and study what happened in the Tokyo session before making a game plan. The Tokyo session is like a basis for some before making some moves in the following sessions. Early in the trading session, many movements are created, especially after releasing data and information about the economy. Commonly, significant actions before the New York trading session justify what occurs during the Tokyo trading session.
To sum it up
As we mentioned a while ago, the economy's status, news, and data release make a massive impact on the forex market. We can say that somehow, Japan depends on commercial companies that export and central banks. With this news and announcements from a major player, China makes ripples, volatility, and price movements in the forex market.
It is safe to say that as soon as there are data and press releases about China, then currency pairs with AUD and JPY creates massive movement.
So, when should you trade, and which currency pairs do you trade? After collecting data from Australia, New Zealand, and Japan, a trader might have a good idea of which currency pair and trade.