If you’ve made the decision to trade forex for the first time, there are probably a number of factors that influenced your choice.
You’re certainly not alone in this respect either, as an estimated $6.6 trillion is traded globally every single day in a market that boasts a total value of $1.934 quadrillion (which is more than 2.5-times larger than the world’s GDP).
The 24-hour forex market is divided into three geographical trading sessions, however, including North America, Europe, and Asia. In this post, we’ll focus on the latter market and offer some tips on how to profit in this space.
Consider Your Trading Base
In the digital age, traders are able to access the market in real-time using their desktop or smartphone, while the deployment of a forex demo account has also made it easier than ever to optimize profitability and accessibility.
It’s important to consider your base when trading the Asian market, however, which is open between the unofficial hours of 11 pm and 8 am GMT. During this session, currencies from nations such as Japan, Australia, and Russia are traded prominently, while there’s also a significant one-hour crossover with the European market at 7 am.
These represent the twilight hours for those based in Europe, creating a logistical challenge that needs to be overcome. Fortunately, this can be largely navigated with detailed technical analysis and automated tools such as stop losses, which help to drive informed decision making and control open positions effectively.
Learn the Terminology
One of the main advantages offered by forex trading and lucrative markets such as Asia is the inflated leverage involved, which enables you to open larger positions and earn far more than your initial investment.
The term leverage refers to the process of taking on debt as a way of funding your open positions and is best described as a percentile or fractional increase based on the amount of capital that you have available.
This term is also synonymous with margin, which is used to describe the total amount borrowed from an established brokerage firm.
It’s crucial that you understand these terms in detail before trading volatile derivatives such as currency, primarily because this type of investment vehicle can also cause you to incur losses far larger than your capital holdings.
What are the Best Asian Currency Pairings
The Asian forex session is underpinned by the Tokyo Stock Exchange, while markets such as Hong Kong, China, and Australia also play pivotal roles during these specific trading hours.
With this in mind, it stands to reason that crosses involving the Japanese Yen should dominate the session, particularly when you consider that this currency is renowned as a safe-haven asset that’s relatively predictable and capable of driving huge trading volumes.
One of the most widely traded pairings during the Asian session is the USD/JPY, which tends to boast low spreads and adheres to familiar and historic trends.
Other prominent Asian crosses include the AUD/JPY, the GBP/JPY and the AUD/CHF, the latter of which is underpinned by the significant trade relationship between Australia and China.