The foreign exchange market, or forex, is a decentralized global marketplace where currencies are traded 24/7. The market is divided into three major trading sessions: the Asian, European, and American sessions. Each session has its own unique characteristics and trading opportunities.
In this article, we will focus on the Asian forex session, which is also known as the Tokyo session. The Asian session starts around 12:00 AM GMT and ends around 9:00 AM GMT. This session covers the trading activities of Asian markets, including Japan, China, Australia, New Zealand, and other Southeast Asian countries.
The Asian session is the first major trading session of the day, and it sets the tone for the rest of the day. It is a crucial session for forex traders because it can offer high liquidity and volatility, particularly during the overlap with the European session.
Here are some of the key characteristics of the Asian forex session:
1. Low volatility during the first few hours
The Asian session is known for its slow start, with low volatility during the first few hours of trading. This is because most of the major financial centers in Asia are closed during this time. However, this can change quickly as other markets begin to open.
2. High liquidity during the overlap with the European session
One of the key advantages of the Asian session is its overlap with the European session. This overlap occurs between 2:00 AM GMT and 4:00 AM GMT when the markets in London and Frankfurt open. This period can offer high liquidity and volatility, making it an attractive time for traders to enter or exit positions.
3. The Japanese yen is the most traded currency during the Asian session
Japan is the largest economy in Asia, and the Japanese yen is one of the most traded currencies in the world. During the Asian session, the yen is often in focus, particularly during the overlap with the European session. Traders watch for any economic news or events that could impact the yen’s value.
4. News releases from Australia and New Zealand can impact the session
Australia and New Zealand are major commodity exporters, and their currencies, the Australian dollar and the New Zealand dollar, are known as commodity currencies. News releases from these countries, such as employment data or central bank announcements, can impact the session.
5. Volatility can increase during political or economic events
Like any other trading session, the Asian session can be influenced by political or economic events. For example, tensions with North Korea or China could lead to increased volatility in the markets. Similarly, any economic news or events that impact the Asian markets could have an impact on the session.
In conclusion, the Asian forex session is an important trading session that offers unique opportunities for traders. While it is known for its slow start, the overlap with the European session can offer high liquidity and volatility. Traders who understand the key characteristics of the session and keep an eye on the news and events that impact the markets can make informed trading decisions.
