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Best time to Trade Forex in Japan

To trade in the forex market, you will need a reputable and well-regulated online trading broker.

Many global online forex brokers accept clients from Japan, offering easy and trusted deposit methods from Japan’s central banks and other payment gateways.

Forex trading in Japan is done during the Asian trading session and it is one of the best times of the day to trade forex, according to many successful traders. It is also referred to as the Tokyo session, often overlooked as a result of lower liquidity when compared to other major trading sessions.

However, these characteristics are exactly what makes the Tokyo session attractive to forex traders who know how to trade it.

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Tokyo forex market hours

The Asian forex session starts off the trading week on a Monday morning at 09h00 and it closes at 18h00 in Japanese Standard Time or JST. In London, for instance, forex traders will have to be awake and trading at 00h00 GMT until 09h00 GMT if they wish to trade in the Asian session in real-time.

Forex traders must consider that the forex market is open 24 hours a day, so official starting times in the financial markets can be subjective. However, it is typically accepted that the Asian session starts when Tokyo banks are online as a result of trading volumes that they must facilitate.

Forex traders still have access to a range of currency pairs that can be traded, in addition to several trading strategies that they can use while trading the currency markets according to the Tokyo session.

Top things to know about forex trading in Japan and the Tokyo session

Retail traders who wish to trade the Asian session must familiarize themselves with its characteristics, which are:

  • Low liquidity
  • Low volatility
  • Clear entry and exit levels
  • Ideal for sound risk management
  • Breakout trading opportunities after the close

Low Liquidity

With lower liquidity in the Asian session, retail traders can focus on a variety of currency pairs. This is because major currency pairs such as EUR/USD, GBP/USD, and EUR/USD are likely to show large price movements outside of typical trading ranges.

This also means that retail traders must keep their trading volume, trading style, and trading schedule in mind. News events when trading the Asian markets may also impact retail traders’ strategies and styles, providing less trading opportunity depending on where traders are based.

Low Volatility

Because the largest liquidity coming into the currency market is from Asia, price movements may be smaller than they ordinarily are in the London or US sessions.

Quick Tip: See which forex brokers offers the best leverage before trading.

Entry and Exit Levels

The support and resistance levels assist experienced traders by showing trading opportunities to either enter or exit certain trades. When traders combine this with signals from technical indicators, it can further increase the probability of entering a profitable trade.

Risk Management

As a result of the Asian session being quieter, traders can manage their trades and trading risks better. The slow nature of the Asian market can allow for a more thorough analysis of risk and reward.

It is also easier for traders to spot levels of support and resistance in the Asian market as they are clearly defined, and coincide with the trading range.

Breakout trading opportunities

As the Asian session ends, it overlaps with the start of the London trading session. This means that there is an increase in liquidity and market volatility, allowing for more breakouts from established trading ranges.

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