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Course 302 – Tokyo Session

Having that the Tokyo session at 12:00 AM GMT signifies the start of the Asian session; the Tokyo session is sometimes also called the Asian session because Tokyo is the financial capital of Asia.

In total, about 21% of all forex transactions take place during this session.

It is important to also note that Japan is the third largest forex trading center in the world and this isn’t strange because the yen is the third most traded currency, making up 16.50% of all forex transactions.

Below is a table of the Asian session pip ranges of the major currency pairs.

TABLE

PAIR TOKYO
EUR/USD 56
GBP/USD 54
USD/JPY 30
AUD/USD 65
NZD/USD 58
USD/CAD 39
USD/CHF 40
EUR/JPY 57
GBP/JPY 72
AUD/JPY 65
EUR/GBP 23
EUR/CHF

These pip values were derived based on averages of past data, and these values not constant values and can change depending on liquidity and other market conditions.

Also, note that the session range for EUR/CHF has not been included since the Swiss franc has been pegged to the euro at 1.2000 during the period.

Here are some important features that you should note about the Tokyo session:

  • Trading isn’t only limited to Japanese shores. Places like Sydney, Singapore and Hong kong are financial hot zones.
  • The major market participants during the Tokyo session are commercial companies (exporters) and central banks. Note that, Japan’s economy is heavily dependent on exportation and, and China is also a major trade player, this means tons of transactions take place on a daily basis.
  • Liquidity can be sometimes very minimal. There will be times when trading during this period will require that you wait a long while before getting a share.
  • It is more likely that you will see Asia Pacific currency pairs like AUD/USD and NZD/USD move with stronger tides than non-Asia Pacific pairs like GBP/USD.
  • During periods of minimal liquidity, most pairs may stay within a range. This brings about opportunities for short day trades or potential breakout trades later in the day.
  • Most of the action takes place early in the session when more economic data is released.
  • Moves in the Tokyo session could set the pace for the rest of the day. Traders in latter sessions will determine what strategies and how to organize it based on the happenings during the Tokyo session.
  • Normally, strong moves in the preceding New York session, may bring about consolidation during the Tokyo session.

PAIRS YOU SHOULD TRADE

Since the Tokyo session is heralded with news from Australia, New Zealand, and Japan, there is usually a good opportunity to trade news events.

In addition, there could be more movement in yen pairs because as Japanese companies transact, a lot of yen change hands.

Since Japan and Australia depend greatly on Chinese demand, we could see stronger movement in AUD and JPY pairs when Chinese data comes in.

Also remember that news from China in most cases, brings about volatile moves because China is also an economic superpower.

Now let’s check out how you can trade the London session in the next course.


We advise you to open a Demo account for the purpose of this phase of learning.

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