Trading in the forex market to make a profit requires preciseness in choosing the accurate time suitable to the currencies you are trading in. No doubt, the forex market remains open for 24 hours and seven days a week, but that doesn’t mean that you can profit whenever you enter the market.
If your preferred trading currency is USD/JPY (the U.S. dollar/Japanese Yen), certain times can favor your trade through enough volatility in the market – high liquidity.
What is the Best Time to Trade USD/JPY?
The best time to trade USD/JPY is a period of high liquidity during the European market from 7 a.m. to 4 p.m. GMT and/or during the USA market from noon to 8 p.m. GMT. The biggest liquidity is when European and USA market sessions overlap from noon till 4 p.m. GMT. The best time to trade USD/JPY (Eastern Daylight Time) is from 7 AM till 11 AM EST. Of course, some trading strategies based on low volatility or trading strategies based on trading during economic news do not trade in high liquidity periods, and traders trade at different times.
In practice, there is no best time for trading because various traders use various strategies. There is no consensus about the best trading time for USD/JPY. Still, most traders suggest that a period of high liquidity is the best period for trading base currencies.
Please look at this video where trader David Morrison talks about the best time for trading especially base currency pairs like USD/JPY is:
Why Should You Trade USD/JPY At the Best Time?
The forex market remains open from various markets across the globe, and thus you will always find a market open to trade currencies. In the U.S. on Sunday night, the first markets to open are the Asian and Australian forex markets. After this, the European market gets open. It gives traders around the globe the opportunity to trade at any time.
Though the shortcomings lie in the fact that not all the markets would be the best time to trade JPY pairs, when the London market opens, it gives immense opportunities to currencies like the British pound (GBP), Euro (EUR), and Swiss franc (CHF). Similarly, when the New York market opens, it gives profitable trading potentials for currencies like the U.S. dollar and the Canadian dollar.
When it comes to USD/JPY, they witness quite stable trades throughout the days as both are highly traded currencies. The session timings are presented as the Forex Market Hours and can be noticed using forex tools. You can choose your preferred time as per your country’s time zone.
Also, it is important to note that daylight saving time affects forex trading. For New York and London markets, trading hours slide for one hour when it’s warmer months in the Northern Hemisphere.
If you do not trade at a suitable time, you will miss out on the potential to gain profits as the volatility would not be favorable.
The Best Time to Trade the GBP/JPY
The best time to trade GBP/JPY pair is between 10:00 and 16:00 GMT when the London market is open, and the daily EU opening range is finished. The highest liquidity for GBPJPY trading is when London and USA markets overlap (from 12:00 to 16:00 GMT). This period provides the best window for price movements.
As the volatility is high during this period, it gives preferred price rangers and high liquidity. Thus, it increases the overall efficiency of currency trading. If you enter your trading capital during this period, you have better odds of winning trades than other timings. Using the trading and tacking tools would give you niche time frames to get good moves in real-time.
What is the best time to trade JPY pairs?
The best time to trade JPY pairs for trend traders is when the EU session and US session overlap (from 7 AM till 11 AM EST), when is the biggest market liquidity. However, for range trading strategy the best time to trade JPY pairs is during the Asian session because of low volatility and because of news related to the Japanese economy.
When Not to Trade the USD/JPY?
The price movement activity for the USD/JPY remains stable for most of the day, though there are times of high volatility. Though high volatility is good, in fact, you should avoid trading when the volatility is too low. The reason for this lies in getting compensated for the currency trades you buy, as low volatility would not cover you for the spread or commission you have to pay.
For the USD/JPY pair, avoid trading between 21:00 GMT and 00:00 GMT. At 00:00 GMT, the Tokyo market gets open, and it is a kind of subdued period of this currency pair. Also, when the Tokyo market closes, the London market opens. The timing between these two trading activities lies from 03:00 to 05:00, which is another time period to avoid trading the USD/JPY.
As these currencies are quite famous, their volatility is considerably great during the day, but it drops during the above-stated time. However, you can always check the most profitable times to trade during the forex trading tools available online.
Forex pairs to trade at night
If you live in Europe or the US and you want to trade during the night you will trade during the Asian session. Forex pairs to trade at night during Asian sessions are USDJPY, AUDUSD, and NZDUSD because of trading news. If you use a range strategy you can trade any major pair. If you use a trend trading strategy the best forex pairs to trade at night are volatile pairs such as AUD/NZD, AUD/JPY, or NZD/JPY.
Learn and Practice
Though these favorable times promise high volatility, you won’t gain profit if you don’t know the forex market functionality. The best way to overcome this shortcoming is to educate yourself and learn about the forex market from credible sources.
It would help if you also tried to trade in more than one currency pair. The EUR/USD and the GBP/USD are also like the USD/JPY and have high volatility. You can develop your trading capabilities for more than one currency pair and identify the best trade times in those pairs. It would give you diversification, and diversification is always welcomed in trading. So, learn and practice- these two main tools would help you gain winning trades in the long run for sure.
Let us repeat one more time: In practice, there is no best time for trading because various traders use various strategies, but high liquidity is a good opportunity for trading USD/JPY.