Best Pair to Trade During Asian Session
The Asian session is well known for being the hardest and the most inactive trading session for Forex traders. This forex session consists of high spreads and low trade volumes. However, some traders prefer to trade during the Asian trading sessions. To achieve this, traders need to master the best forex pairs to trade within these trading sessions. This brings us to the title of this article, best pair to trade during Asian session.
Most forex traders endeavor to start away from the Asian Session. This is because of the low volume, volatile moves, and Hugh spreads. However, some traders prefer to trade during such trade hours. When picking a trading session, make sure to pick the most profitable forex pairs for that moment.
When is the Asian Session?
The Forex Market is actively traded 24 hours a day 5 days a week. The trading sessions are categorized into different trading sessions, namely: the Asian, North American, and European sessions.
To be precise, the above trading sessions are grouped. This means the Sydney, Asian, Tokyo, European, and North American sessions form the London and New York sessions.
The Asian trading hours are when the Asian world is actively being traded. During this time, Europe and the US are not actively trading. European traders are out of the market during these trading hours. Sydney trading sessions and Asian trading sessions extend over one another. The Tokyo session begins 2 hours after the Sydney trading session. One hour before the close of the Tokyo trading session, the London trading session begins.
The major aspect of the Asian session conventionally starts with the Sydney session at 2200 GMT, followed by Tokyo which begins at 0000 GMT, the markets begin on Sunday night and close on Friday evening, ending with the New York session which ends at 2200 GMT.
The Sydney session starts at 0700 GMT for the Asian markets, while the Tokyo session closes at 0900 GMT.
It’s important to note that the two trading sessions, Tokyo and Sydney overlap.
Apart from the Forex market being closed on weekends, the market is also closed on some specific days such as 1st January, and 25th December.
Based on trading sessions, the national public holidays influence the close of the markets, thus, affecting the trading volumes of the country’s currency and also the price movements. Additionally, economic data are not published on public holidays.
Note that, unlike other trading sessions, the Tokyo volume trading session is at its highest when the trading session is about to end. The Sydney trading sessions have low trading volumes. Focusing more on the Tokyo/London crossover rather than focusing on Sydney trading hours. This is because the Sydney trading sessions have very low trading volumes.
Best Pair to Trade During Asian Session
For traders who prefer to trade during the Asian trading hours, they need to know the best pairs to trade with during the Asian session. Most experienced traders graduate towards JPY or AUD Forex pairs. It is not advisable to trade any USD, EUR, or GBP pairs. This is because USD, GBP, or EUR major pairs will have higher spreads and lower volumes during such trading hours. With these characteristics, trading the major pairs will be difficult during the Asian trading hours. The JPY and AUD pairs will have larger trading volumes and lower spreads. This makes them an easier and better option during the Asian trading hours.
To explain further, the European and US firms are closed at night. These countries own the major pairs which are the EUR, USD, and GBP. It’s only logical to avoid these pairs due to the lack of liquidity and low volume with these currencies. Trading with these currencies reduces the trader’s profit opportunities. This is because, during these trades, these currencies will be stagnant, and there won’t be any notable price trends. Therefore, traders will not be able to read price charts and make trade decisions.
Experienced traders in the Asian trading hours focus on the JPY and AUD pairs. This is the best idea because the trading volume begins with Sydney and Tokyo. These forex pairs have high liquidity and they are bound to generate some top-notch price moves. The trading volume on NZD pairs is normally low, therefore most traders tend to ignore them.
Simply put, the Asian session traders focus on forex pairs such as USDJPY, AUDNZD, AUDJPY, and GBPJPY. Traders are advised to stay away from forex pairs such as EURCHF, EURGBP, and GBPCHF.
To explain in more detail, Forex trading during the Asian hours is grouped into Major pairs, cross pairs, and exotic pairs. As earlier stated, the Major pairs are not advised during the Asian trading hours. This is due to their low trading volume and high spreads.
The Asian Session Major Pairs
The main forex pairs for the Asian trading hours are USD/JPY US Dollar ($) against the Japanese Yen (¥). Another major forex pair during the trading hour is AUD/USD Australian Dollar (A$) against the U.S Dollar ($). Also, the NZD/USD is the Kiwi Dollar (N$) against the U.S Dollar.
The Forex market is mostly filled with traders who actively trade the Major currency pair. The major currency pairs are made up of the Euro/U.S Dollar, UK Pound/US Dollar, US Dollar/Swiss France, and the Canadian Dollar/US Dollar. The major currency pairs cover about 70% of the entire Forex market. This is because, in the global forex market, the major currency pairs are known to be highly liquid and generate more profits.
EUR/USD is the most traded currency pair globally. However, during the Asian trading sessions, the most traded currency us the Japanese Yen. This currency makes up 20% of Forex trades daily.
In the last few years, China has greatly influenced the markets, the forex markets have been paying close attention to China’s central bank, known as the PBoC, and the Customary fixing rate for the Chinese Yuan. The central bank views the Chinese economic results by following how the PBoC fixes the Chinese Yuan. An indication that the economy will soon weaken is when there are any devaluations. This could negatively affect the Asian market and the Asian developing currencies.
Asian Session Cross Pairs
Cross pairs are made up of major currency pairs except for the US Dollar. For Asian trading sessions cross pairs include the AUD/CHF, AUD/NZD, AUD/CAD, AUD/JPY, NZD/JPY, and GBP/JPY. The Japanese Yen makes up more of the crosses during the Asian session.
Asian Session Exotic Pairs
As for the exotic pairs, the currencies linked to them are currencies belonging to underdeveloped countries and economies. Their economic values had no positive or negative impact on the global economy and it will have lower trading volumes and low liquidity. Exotics will be highly unpredictable and a lot riskier. Which can be seen in their larger bid-offer spreads.
The Asian exotics are as follows, Thai Baht, Philippine Peso, Indian Rupee, Singapore Dollars, Hong Kong Dollar, and Malaysian Ringgit.
The key to having the best Asian currencies to trade solely depends on the trader’s trading platform. A trader should endeavor to pick the best trading platform there is. This will enable the trader to make good trade choices while using the best technical, fundamental, and sentimental tools provided by this platform. Also, make sure the platform provides a trading platform that covers the Asian countries.
Best Forex Trading Strategies to Employ During Asian Hours
After broadly explaining what the Asian market is and how it works, the next is to talk about the best strategies to trade during this trading session.
The basic key to a good and profitable Forex trade is having a good trading strategy. A good forex trading strategy depends on the trader’s plan. For instance, if the trader plans to go for fundamentally influenced trades or long-term trades, or if a trader is going for short-term trades, like day traders, or scalpers, they focus more on the day timeframes.
Most traders that open and close multiple trades within a 24-hour time frame mostly generate little profits. However, some traders generate more profits because they are experienced and know how to take advantage of the low market swings.
Generally, long-term traders or fundamentally inclined traders are advised to stay away from high volatile trades. This could be trading session overlaps, for instance, in the Asain trading session. Long-term traders are advised to stay away from New York close, European open, Asian open, and Asian close.
However, in some cases of overlaps, there could be the possibility of traders rating profits from the volatility. However, oftentimes than not, the unpredictability of the trade could lead to a huge loss of funds and profits.
Additionally, the economic calendar plays a vital role in the decision-making when it comes to session overlaps of the U.S, Europe, and Asia. The economic calendar is mainly used by short-term traders to pinpoint the movement of prices. When used by long-term traders it could result in high volatility.
For short-term and long-term traders, it is important to know how the economic calendar works, and this monthly, quarterly, or semi-annual released data influences the price trend of trade. Traders should also analyze the level of influence associated with each released information. Short-term traders depict a lot of trading opportunities when the economic data is released. They detect if the data released has a positive, negative, or neutral effect on the currency they want to trade.
The price action of the trade is displayed before the economic data release when the economic data is released, and after the economic data is released. Before the economic data release, market analysts put out market forecasts predicting the economic data release. However, if the data released is contrary to the forecast, it shows a negative impact on the market, but if the forecast is similar to the data released, it shows a positive impact on the market.
For Long term traders, understanding the major economies, their performance, and their personal central bank’s viewpoints on monetary policy. Also, long-term traders should pinpoint which economic data release will change the performance of the trade.
The Asian market will be greatly influenced by economic data released from Australia, New Zealand, China, and Japan. Economic data released from China influence the Asian markets, and also beyond the Asia market. For Aussie Dollar and Kiwi Dollar, the two currencies are more vulnerable to news reports coming from China, especially when it relates to trading and manufacturing.
With numerous economic data slated for daily, traders should endeavor to concentrate on the data release that is more influential to their trades.
The delivery of Central Bank Policy Meeting Minutes.
Trade Balance, Imports, and Exports reports.
Private Sector PMIs.
Consumer price index.
Consumer Spending / Retail Sales.
Central Bank Member Speeches
Central Bank Monetary Policy Decisions.
These above-mentioned indexes are highly influential when deciding on the best pair to trade during Asia session. They hold the key to major price movements, traders are advised to look out for these indexes and news reports when choosing an Asian currency pair.
In conclusion, the best strategy to employ when trading during the Asian session is the use of economic data release. Traders should follow up on central bank speeches, and overlap between trading sessions, like the Sydney and the London overlap. It is also highly advised to sign up with a Forex broker that provides top-notch trading experience with modernized technical tools. There are lots of highly regulated brokers who trade during Asian hours. These are the brokers a trader intending to trade with during the Asian trading sessions should trade with.
There are lots of Forex pairs a trader can pick from, there are the exotics pairs, cross pairs, and major pairs. However, the exotic pairs are mainly for experienced traders looking to venture into risky trades. Additionally, exotic pairs are also influenced by geopolitical risk.
For long-term traders sticking to fundamental analysis, and evading high volatility caused by session overlaps and economic data releases is advised.