The Complete Guide to Trading Asia Session (Forex)

Summary

In this detailed guide on trading the Asia session, the focus is on the Tokyo session, which offers higher volume and better opportunities compared to the low-volume Sydney session. The guide covers optimal trading pairs such as JPY pairs and gold, with an emphasis on timing—particularly the second hour after Tokyo’s open. Key strategies include using 4-hour candle behavior for identifying reversal points and aligning market structure across time frames. Consistency in trading at the same time each day is highlighted as a crucial element for success. This session is ideal for traders seeking to capitalize on clean market moves.

Takeaways

• 😀 The Asia session is underrated and offers good trading opportunities if you focus on the right times and pairs.
• 😀 The Asia session is divided into two parts: the Sydney session (low volume) and the Tokyo session (higher volume).
• 😀 Sydney session is not ideal for trading due to low volume and range-bound price action. It's best to avoid trading during this time.
• 😀 Tokyo session offers better volume and cleaner moves, especially for JPY and AUD pairs.
• 😀 The best time to trade in the Asia session is during the second hour of the Tokyo session, around the new 4-hour candle open.
• 😀 Focus on trading pairs like USD/JPY, Euro/JPY, and GBP/JPY during the Tokyo session for optimal volume and price action.
• 😀 Avoid trading AUD/JPY pairs during the Tokyo session as both currencies are active, which can lead to less predictable price action.
• 😀 Trading during the second hour of the Tokyo session is particularly effective for gold, which experiences increased volume during this time.
• 😀 Use the 4-hour candle behavior to identify potential reversal opportunities, particularly when the new candle opens against the previous candle's close.
• 😀 Be mindful of the previous day’s close—if it’s bullish, the Asia session often opens bearish (and vice versa), creating opportunities to trade with market sentiment.
• 😀 Consistency is key: trade at the same time each day to align with market volume and understand price movements better, improving your chances of success.

Q & A

Why is the Sydney session not recommended for active trading?

The Sydney session tends to have low volume, which results in range-bound and slow price action. This makes it less suitable for active trading, as it lacks the volatility needed for significant market moves.

What is the ideal time to trade during the Asia session?

The ideal time to trade during the Asia session is the second hour of the Tokyo session, particularly around the new 4-hour open. This is when volume increases, especially for pairs like JPY and gold.

Which pairs are best to trade during the Tokyo session?

During the Tokyo session, it is best to trade USD/JPY, EUR/JPY, GBP/JPY, and gold. These pairs tend to have better volume and cleaner moves compared to others during this time.

Why should traders avoid trading AUD/JPY during the Tokyo session?

Traders should avoid AUD/JPY because both the Australian Dollar and the Japanese Yen are active during this session, which can lead to less favorable conditions for trading. It's better to focus on pairs with only one active currency.

What should traders focus on when the previous 4-hour candle closes bullish?

When the previous 4-hour candle closes bullish, traders should be mindful that an immediate push bullish on the next 4-hour candle may indicate a reversal. In this case, it’s often a good idea to look for a sell as price might create a bottom wick.

How does the previous day's close affect trading decisions during the Asia session?

The previous day's close plays a crucial role in setting the tone for the Asia session. If the previous day closed bullish, traders are likely to see bearish movement at the start of the Asia session. Conversely, if the previous day closed bearish, bullish movement is expected at the start of the Asia session.

What does a 'bottom wick' indicate in trading, and why is it important?

A bottom wick indicates that the price has moved lower during a candle but then reversed, closing higher. This often signals a potential reversal or continuation of the trend, providing an opportunity to trade in the opposite direction.

What is meant by 'change of character' in trading, and how does it affect trade decisions?

A 'change of character' refers to a shift in the market's price structure, such as from bearish to bullish or vice versa. This change is important because it signals a possible reversal or continuation of the trend, which can be used to identify optimal entry points for trades.

Why is consistency in trading time and strategy important?

Consistency in trading time and strategy is important because it allows traders to align with the market’s volume and patterns. By trading at the same time each day, traders can better understand market behavior, leading to more consistent results.

How does volume affect trading during the Tokyo session, especially for gold?

Volume during the Tokyo session, especially in the second hour around the new 4-hour open, can be significantly higher, providing better market movement. For gold, this period sees increased volume, which can result in more reliable price action and better trading opportunities.