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Asian Trading Session

Asian Trading Session

This lesson will cover following

  • Basic features of trading during the Asian session
  • Advantages and disadvantages

The tables, which we provided in the previous article, make it clear that Australian and Japanese trading sessions to a great extent overlap one another. Thus, when talking about the Asian trading session, we often refer to Japanese session (or Tokyo session), as Tokyo is the third largest trading center worldwide (accounting for 6.2% of the overall trading volume).

asian tradingIn addition, about 20% of all transactions within a day occur during the Asian trading session, while the Japanese yen accounts for almost 23% of all transactions in the currency market as a whole.

However, Japan is not the only nation, which trades during this session. Other major centers are Hong Kong, Singapore and Sydney. Centers such as China, New Zealand, Russia and Malaysia are also active during the Asian session. So, the Asian session does not necessarily begin and end with the opening and closing of Tokyo as a center.

Let us provide some key features regarding trade during the Asian session.

first the session begins at 23:00 GMT and lasts until 8:00 GMT on the next day, or from 19:00 EDT to 4:00 EDT during the summer period and from 18:00 EST to 3:00 EST during the winter period. At the very start of the session only centers such as Sydney are trading, which explains why trading volumes are relatively thin and therefore price changes are likely to be insignificant compared to price movement, observed during the European and American sessions.

second liquidity during this session is lower in comparison with that during European and American sessions, thus this often leads to the so called consolidation in the currency market, which is a state, when prices move in a thin range. Some traders may take advantage of such a circumstance and prepare to trade the upcoming breakouts, when Tokyo session shifts to the London session and market activity usually expands.

third as Japans economic growth draws its strength from export and as Hong Kong is predominantly a financial center, the major participants in the Forex market during the Asian session are usually commercial, investment, central banks and exporting companies.

currencies of nations located in the Asian-Pacific part of the globe are expected to be more active during the Asian session, than currencies of nations outside that region. Thus, currency pairs, including the Japanese yen, the Hong Kong dollar, the New Zealand dollar, the Australian dollar, the Malaysian ringgit are likely to see higher volatility, when the Asian session is active. This comes as a result of the fact that business entities and traders from any specific country in the region will probably use their domestic currency in the majority of their foreign exchange transactions.

during the Asian session strings of macroeconomic data are usually released out of Australia, New Zealand and Japan or statements by policymakers from these countries are usually announced, so traders, who base their strategies on fundamental analysis (or news traders, as they are also known) may decide that it is the best period of time to trade currencies of nations located in the Asian-Pacific region.

the most active part of the trading session is during the morning, when major parts of the economic data come out.

as the Asian session is the earliest of all three sessions, European and American traders are likely to observe its outcome in order to construct or modify their strategies until the end of the day.

Now that we discussed the peculiarities of trading during the Asian session, we move forward to the next segment of the trading day, the European session.