The 24/5 forex market is a fascinating entity, with daily trading activity in this space typically split across three distinct geographical regions.
Arguably the most interesting of these trading sessions focuses on the Asia-Pacific region, which unofficially runs between the hours of 11pm and 8am (GMY). This session commences when the Sydney Stock Exchange opens in Austria, before closing with the Tokyo Stock Exchange the following morning.
But what do you need to know about this trading session, and what are the best currencies to invest in during this time?
Trading Basics and Identifying the Best Currencies
There are a number of currencies that are widely traded during the Asian session, including the Japanese Yen, the Chinese yuan and the Australian dollar.
These currencies drive the highest trading volumes and dominate the most popular pairings, with relatively secure and predictable entities like the USD/JPY even considered to be a sage haven asset by some.
Similarly, the GBP/JYP provides considerable volatility and opportunity from a trading perspective, with this pairings high pip value central to its universal appeal.
Trading the Asian market also offers access to some genuinely intriguing exotic currency pairings, including the USD/THB (Thai Baht) and the USD/HKD (Hong Kong Dollar).
Interestingly, we have seen numerous investors hedge against the USD/HDK this year, with the Hong Kong dollar having benefitted from sustained investment during the coronavirus pandemic and having experienced a significant price hike as a result.
These exotic currencies are increasingly appeal to forex traders, as they offer unique access to lower trading volumes and increased volatility. This can translate into increased short-term gains, although there is also enhanced risk due to the lack of liquidity that defines minor and exotic currencies.
How to Trade the Asian Session – And Why Timing is Everything
When starting out in the forex market, we’d definitely recommend minimising the number of pairings that you actively trade.
You may also want to commence this stage of your trading journey by focusing on a major pairing such as the USD/JPY, before looking to scale and diversify your efforts in line with growing profitability and experience.
You can also start to trade exotic currency pairings in this space over time, as you look to access assets that boasts a higher level of risk and reward.
Another key consideration here is timing, as forex traders tend to make higher levels of profit in instances where volatility is increased and their chosen market is the most active. These periods present unique opportunities for traders to make gains from their trades, so targeting them is crucial to your chances of success (especially when operating overseas).
Most importantly, you should consider targeting periods in which forex market opening hours overlap. For example, let’s say that you’re based in the UK and trading the GBP/JPY, and want to access the most volatile trading period.
In this instance, you should aim to trade between the hours of 7am and 8am GMT, as this covers the final hour of the Tokyo trading session and the opening of the London Stock Exchange.
Conversely, you could also look to trade the same currency between the hours of 3am and 4am GMT, as this will coincide with the most volatile trading hours over in Japan (which are between 12-noon and 1pm).
