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Asian Session and Its Features

Sumo Wrestler

The Asian trading session is renowned for kick-starting market activity, with the exception of the less significant Pacific session. It begins with the opening of the Tokyo Stock Exchange at 11:00 PM GMT (2:00 AM Moscow time). During this time, Australian and New Zealand exchanges are still active, adding liquidity and influencing spreads across most currency pairs. From the outset, the market becomes livelier, trends emerge, and significant movements start to take shape. An hour later, Chinese exchanges and Singapore join the action, further boosting activity. The correlation between market activity and the number of open exchanges is evident.

By morning Moscow time, financial centers like Wellington and Sydney begin to close. However, this does not significantly impact trading as the European session is about to commence. By 8:00 AM GMT (11:00 AM Moscow time), trading in Japan ends, creating a one-hour overlap with European exchanges and increasing trading volumes. Hong Kong and Singapore, which close later, provide a two-hour overlap with Europe. By noon Moscow time, the Asian session concludes, and all major European exchanges are open.

Key Exchanges

Among the numerous exchanges, the following are the most significant during the Asian session:

  1. Sydney

    • An active participant in the Asian session, providing substantial liquidity at its onset.
    • Plays a crucial role in trading pairs involving the Australian dollar, such as AUD/USD and AUD/JPY.

  2. Tokyo

    • The most important Forex hub in Asia and a central platform for stock and currency trading.
    • The Bank of Japan significantly influences the market.

  3. Hong Kong

    • While the Chinese yuan remains tightly regulated, other currencies, including the US dollar, are actively traded.

  4. Singapore

    • An emerging but vital financial center with a strong demand for the Singapore dollar.

Major Currencies

The Asian session is dominated by regional currencies, which account for over 60% of trading volume. Key currency pairs include:

  1. AUD – Australian Dollar

    • A major currency of the session, heavily tied to Australia’s resource-export-driven economy.
    • Key pairs: AUD/USD, AUD/JPY.

  2. NZD – New Zealand Dollar

    • Typically traded in pairs like AUD/NZD and NZD/USD.
    • Often correlated with the Australian dollar.

  3. JPY – Japanese Yen

    • The dominant currency of the region and one of the most actively traded globally.
    • Key pairs: USD/JPY, EUR/JPY.

Characteristics of the Asian Trading Session

1. Range-Bound Market (Asian Flat)

  • The session often starts with a range-bound movement, known as the "Asian flat."
  • Breakout strategies are popular among traders, as strong movements frequently follow the consolidation phase.

2. Political and Economic Influence

  • The Asian session is sensitive to regional economic data, such as GDP, employment figures, and central bank decisions.
  • Political events and official speeches can also drive volatility during this session.

3. Session Overlaps

  • The most active period is from 11:00 AM to 12:00 PM Moscow time when Asian markets overlap with European markets. This overlap generates higher trading volumes and significant market movements.

4. Trend Formation

  • The Asian session often sets the tone for daily trends, which may continue into the European and American sessions.

Example Strategies

  1. Breakout Trading

    • Identify a range formed during the initial hours of the session, and prepare to trade on a breakout of support or resistance levels.

  2. Trend Following

    • If a trend was established during the American session, the Asian session can confirm its continuation.

Conclusion

 

The Asian trading session is the starting point of the global trading day, offering numerous opportunities for analysis and strategic trading. Its unique features—range-bound movements, trend development, and session overlaps—make it an essential component of the Forex market. Traders who understand and leverage the specific characteristics of this session can capitalize on its advantages for successful trading.