Tokyo session time in South Africa
Trading in foreign exchange takes place around the clock, five days a week, with the main sessions taking place in London, New York, and Asia.
Traders are able to implement their strategies in a timely and effective manner at any given time since every key geographic market centre can display a drastically diverse set of traits and patterns. This article will focus on the aspects of trading the Tokyo session in South Africa with brokers like Khwezi Trade.
The Tokyo Session from a global perspective
The Tokyo session starts at 23:00 GMT and continues until 8:00 GMT the following day, which is equivalent to 19:00 EDT to 4:00 EDT during the summer and 18:00 EST to 3:00 EST during the winter.
Because only a few centers, such as Sydney, are trading at the very beginning of the session, this explains why trading volumes are generally low. As a result, price fluctuations are likely to be minimal in comparison to price movement seen during the European and American sessions.
As a result of the reduced level of liquidity during this session in comparison to that of the European and American sessions, the currency market frequently enters a state known as “consolidation,” which is characterized by prices that remain relatively stable within a narrow trading range.
When the Tokyo session gives way to the London session, there is typically an increase in market activity, and some traders may decide to take advantage of this situation by getting themselves ready to trade the forthcoming breakouts.
Economic movements around the Tokyo Session
Because Japan’s economic expansion is driven primarily by exports, and because Hong Kong is primarily known as a financial centre, the major participants in the foreign exchange market during the Asian session are typically commercial, investment, and central banks, as well as companies that are involved in exports.
During the Asian trading session, market participants should pay greater attention to the currencies of countries located in the Asia-Pacific region of the globe than they do to the currencies of countries located in other parts of the world.
When the Asian session is active, it is possible that currency pairs may see higher levels of volatility. These currency pairs include the Japanese yen, the Hong Kong dollar, the New Zealand dollar, the Australian dollar, and the Malaysian ringgit.
This is because commercial entities and merchants from every country in the region will probably utilize their own national currency for the majority of the foreign exchange transactions they engage in, due to the fact that their home currency is more stable than other currencies.
During the Asian session, several sets of macroeconomic data are typically released out of Australia, New Zealand, and Japan, or statements by policymakers from these countries are typically announced.
As a result, traders whose trading strategies are based on fundamental analysis (also known as “news traders”) may decide that the Asian session is the best time to trade the currencies of nations located in the Asian-Pacific region.
Because the most important pieces of economic data are released first thing in the morning, this is the most active phase of the trading session.
Because the Asian session begins the earliest of the three sessions, traders in Europe and the United States will likely watch its outcome in order to create or adjust their trading strategy until the day’s end.
The Tokyo Session for South African traders
The United States Dollar and the European Union’s Euro are the two most commonly traded currencies in the world, with the Japanese Yen coming in third place.
The yen is involved in approximately one in five (17%) of all foreign exchange transactions, and the Asian trading session is responsible for twenty percent of all foreign exchange trading activity. Because of this, the significance of the Asian trading time should not be underestimated.
The three most important financial hubs in the region—Tokyo, Hong Kong, and Singapore—are also the three most dominant players in the Asian Session. Because of the rising amount of currency trading that takes place in Singapore, the Asian trading session may eventually be referred to as the Singapore Session instead.
Singapore and Hong Kong are responsible for more than 8 percent of the total trading volume, although Tokyo is only responsible for 4.5 percent of the total market value.
The most action takes place at the Tokyo Session, which occurs at the start of each trading week. These times are Sunday evening in New York at 17:50 Eastern Standard Time (09:50 GMT), and just before midnight in London on Sunday night at 10:50 British Summer Time (BST).
When to trade the Tokyo Session from South Africa
The Tokyo open market often experiences its greatest trading activity as soon as economic reports and figures are released in the early morning hours.
Nevertheless, make sure that you are keeping an eye on Hong Kong and Singapore in addition to Sydney, since these three cities tend to heat up throughout the Asian trading day.
Asian economies are highly dependent on exports and banking; these sectors do not experience the same level of volatility as high technology and commercial services on other stock exchanges. As a result, there is less liquidity in Asian trading sessions than in New York and London.
Therefore, South African traders should start their trading day with the Tokyo Session, from 8 AM to 10 AM CAT.
Top tip: If you haven’t done so previously, you really should start trading EUR/JPY right now. When there is a lot of movement in the price of one pip, there is an opportunity for trades, despite the fact that volatility isn’t as high as usual.
Strategies for trading the Tokyo Session
Because support and resistance levels are adhered to more regularly during the Asian trading session than they are during the more liquid London and US trading sessions, range trading is particularly well-suited to the Asian trading session.
Breakouts and range trading are the two trading methods that are used the most frequently during the Tokyo forex session.
Range Trading Strategy
When the price moves in a discernible direction, a trader should follow it since doing so increases the likelihood of making a profit.
This is the fundamental idea of trading with the trend. The trader will get out of their market position when the trend comes to an end, possibly making a profit in the process.
When a trader engages in range trading, they are attempting to make a profit from a market that is range-bound, also known as a trading range. But what exactly does it mean when a market is range-bound?
A market is said to be range-bound when the price of a securities remains stagnant for an extended length of time, moving sideways between two prices without making any significant gains or losses.
The price encounters resistance at the high point of the range, while the price encounters support at the low point of the range.
Range traders utilize both long and short positions, purchasing when the security is reaching its support level and selling when it is approaching its resistance level. This differs from trend-following traders, who open a position in line with the market’s direction.
In general, a trading range can be identified when the price has recovered two times from the same support level and two times from the same resistance level. In other words, this is the minimum number of times the price must recover before a trading range can be established.
Keep in mind that the highs and lows that comprise the regions of support and resistance won’t always be exactly the same – in fact, it’s quite doubtful that they will be – but they still need to be somewhat near to one another.
Once a trading range has been recognized, a trader can try to enter market positions in an effort to profit from it.
Break-out trading strategy
The goal of a breakout strategy is to enter a trade as soon as the price is able to move out from its previous range and into new territory. Traders seek for high momentum, and the actual breakout is the signal to enter a trade so that they can profit from the subsequent movement of the market.
Traders have the option of entering positions at the market, in which case they will be required to carefully monitor the movement of the price, or they can enter the positions by setting buy stop and sell stop orders.
They will typically position the stop slightly above the level that formerly served as support or just below the level that formerly served as resistance. Traders may make use of traditional support and resistance levels when determining their exit goals.
When applying the breakout entry strategy, one approach to use it is to enter a trade whenever the price has broken through a resistance level. Many traders believe that if a price is able to break over a level of resistance, it indicates that it has the potential to continue climbing.
The reasoning for this is that if the price breaks through a level of resistance, it may indicate that traders are bullish and will support an increase in price.
Although this isn’t certain to be the case every time, many traders consider a breakout from a resistance level to be an excellent entry position.