If you’re interested in trading currencies on the foreign exchange, we can understand why. After all, this market sees an estimated $6.6 trillion traded globally every single day, while the total value of the foreign exchange is a staggering $1.934 quadrillion.
However, the forex market is highly volatile and leveraged, creating a scenario where there’s ample opportunity to incur both losses and a profit over time.
Not only this, but the 24-hour forex market is also split across three geographical regions including North America, Europe and Asia. In this post, we’ll appraise the Asian market and the best currency pairings to trade within this space.
1. What is the Asian Trading Session?
The Asian trading session has unofficial hours that run between 23:00 and 08:00 GMT, which means that the market can be inaccessible to investors based in Europe and North America.
Fortunately, the modern forex broker has helped to optimise market accessibility regardless of your geographical location, while the use of tools such as stop losses also enable traders to automatically close positions when they reach a predetermined level of loss.
It’s also important to note that the Asian trading session enjoys a one-hour crossover with the European market between 07:00 and 08:00 GMT, creating a significant spike in trading volumes and volatility. This can be leveraged by investors to optimise profitability by capitalising on price shifts within this period of time.
2. What are the Best Asian Currency Pairs?
You may know that Asian currencies are increasingly dominant in the forex market, with an estimated 20% of all transactions in this space during the Asian session.
But what are the most popular currency pairings traded during the Asian session? The most obvious answer is the USD/JPY, which is one of the most widely-traded pairings in the world and one that offers exceptional leverage and relatively predictable trends.
GBP/JPY and USD/CHF are also widely traded through the Tokyo stock exchange in Japan, with the former driven by high levels of volatility and capable of delivering inflated profits.
You should also note that a host of other Asia-Pacific currencies are traded during the Asian session, with the AUD/USD and the NZD/CAD pairings amongst the most popular.
3. How to Profit in the Asian Trading Session
You also need to understand that the Asian trading session boasts typically low levels of volatility, with prices shifting within a relatively narrow range when compared to Europe and North America.
This also lends itself to clear entry and exit levels in the Asian marketplace, and combining this natural advantage with key signals from indicators can optimise the quality and profitability of your trades.
You need to factor these elements into your trading strategy, with the Asian market arguably best traded by investors with a relatively modest appetite for risk. You should also focus on trading one or two pairs at a time, rather than overloading your portfolio and complicating your activities.