Just because the global foreign exchange (forex)market is open 24 hours a day, that doesn't mean every one of those hours is worth trading in.The U.S. dollar/Japanese yen (USD/JPY) tradehas certain hours that are acceptable for day trading, because there's enough volatility to generate profits that arelikely greater than the cost of the spread and/or commissions. The best day traders don't want just "acceptable hours" to trade; they want to be trading the best hours of the day—those that offer the best bang for their buck. To be efficient andcapture the largest intraday moves day traders hone in on, traders should focus only on specific hours of the day.
Activity During Trading Sessions Around the Globe
Due to global time zone differences, there is always a forex market open for business somewhere during the week. On Sunday night (in the U.S.), the Asian and Australian markets open first, facilitating trading. Then Europe opens. Then North America. So there are always traders, banks, or businesses willing to trade around the clock.
Not all globalmarkets actively trade all forex pairs or currencies, though.Therefore, different forex pairs see hiring trading activityat different times of the day.
When London is open for business, pairs that include the euro (EUR),British pound (GBP), and Swiss franc (CHF)are more actively traded. When New York is open for business, pairs that include the U.S. dollar (USD) and Canadian dollar (CAD) aremore active.
The USD/JPY pairing is a bit oddin this regard. The yen and the U.S. dollar are highly traded currencies, so this pair typically sees relatively stable action throughout the day, with a few peaks and troughs in volatility.Session times are shown at theForexMarketHourstool,which defaults to Greenwich Mean Time. You can select your own time zone (or your forex broker's time zone) instead.
Note that there is a shift due to daylight saving time. During the warmer months in the Northern Hemisphere, trading hours for New York and London slide forward an hour. When daylight saving time rolls around, if you are uncertain about when markets open and close, check the market hours tool for confirmation.
Times to Avoid Trading the USD/JPY
An hourly volatility chart shows how many pips—hundredths of a yen—the USD/JPY pair moves each hour of the day.
Price movement activity is relatively stable through much of the day, although there are periods with noticeable drops in volatility. Avoid day-trading during those low-volatility times, because if you trade then,the pip movement may not be large enough to compensate for the spread and/or commissions you'll pay to make the trade.
Trading in thispair is subdued between 21:00 GMT and the Tokyo open at 00:00 GMT, so that's not ideal for day-trading. As Tokyo winds down and before London opens, the pair sees another drop in volatility between 03:00 and 05:00. This is another time to avoid trading.
Average daily volatility changes over time, but those hours of least volatility typically do not change. To check whether other times of the day have been showing unusually low—or high—volatility, look at volatility statistics on Mataf.Click on a currency pair for an updated chart.
To see how many pips a forex pair is moving in a typical day, apply an average true range (ATR)indicator to a daily chart. If the ATR is set to 15, the ATR will show the average daily volatility over the last 15 days.
Ideal Times to Day-Trade the USD/JPY
If you are able to, day-trade the USD/JPY between 12:00 and 15:00 GMT. London and New York are both open for the bulk of this period. Even though Tokyo isn't open, this three-hour window typically presents the largest price moves of the day.(Sometimes volatility remains high for another hour, until 16:00, for a four-hour window.) This means greater profit potential, and spreads are also typically tightest during this time.
The bottom line is trading between 12:00 and 15:00 maximizes your efficiency in trading the USD/JPY. This period often provides the most opportunities to deploy trading capital, as the increased volatility provides more opportunities to trade.
There may occasionally be other times that produce good-sized moves for weeks or months at a time. Regularly check volatility statistics on Mataf to see what times of day are most active. Since the USD/JPY is actively traded around the clock, there may be some other times you can take advantage of.
Other Currency Pairs to Trade
If you can't trade during the most active times in the USD/JPY, then look at trading other pairs, such as the euro/U.S. dollar (EUR/USD) or British pound/U.S. dollar (GBP/USD), that might offer better opportunities for you.
Frequently Asked Questions (FAQs)
How do you trade the USD/JPY pairing?
To trade USD/JPY or any other forex paring, you'll need access to a forex brokerage account. Some stock brokers also give you the ability to trade forex. You may need to seek out a specialized account with a broker that focuses on forex markets.
What would you expect to happen to USD/JPY if interest rates go higher?
When interest rates increase, you earn more money for the currency you save in a bank account. If one currency raises rates and another doesn't, then the rate hike increases the currency's value. If you can get more money by storing cash in dollars rather than yen, more people will want to trade yen for dollars, and the dollar's relative value will increase.
FAQs
In conclusion, the best time to trade USD/JPY in EST is during the most active trading hours, which are from 8:00 AM EST to 5:00 PM EST. However, traders should also consider other factors such as economic news and events, market sentiment, and their trading style when determining the optimal trading time.
What time to trade USD JPY? ›
History shows that the best window of opportunity for trading this pair is from 12:00 to 15:00 GMT. That's when the pair sees the greatest liquidity and volatility.
Is USD JPY a good pair to trade? ›
USDJPY is considered an important pair among day traders, swing traders, and long-term position traders for various reasons including the following: Liquidity: As one of the most actively traded currency pairs globally, the USD/JPY is recognized for its liquidity and trading volume.
How to trade USD JPY successfully? ›
Technical analysis can be highly effective for trading USD/JPY. Learn how to use various technical indicators, chart patterns, and candlestick patterns to identify potential entry and exit points. Interest rate differentials between the US and Japan can greatly influence the USD/JPY exchange rate.
What session is best to trade USD pairs? ›
The U.S./London markets overlap (8 a.m. to noon EST) has the heaviest volume of trading and is best for trading opportunities. The Sydney/Tokyo markets overlap (2 a.m. to 4 a.m.) is not as volatile as the U.S./London overlap, but it still offers opportunities.
What is the best indicator for USD JPY? ›
USD/JPY Trading signals
- 15 minutes. CCI indicator is oversold : under -100. CCI indicator: bullish divergence.
- 30 minutes. CCI indicator is oversold : under -100. ...
- 1 hour. Near horizontal support. ...
- 2 hours. Williams %R indicator is oversold : under -80.
- 4 hours. RSI indicator is oversold : under 30.
The yen is heading for a monthly gain of 5%.
What is the most predictable forex pair? ›
Top 5 Predictable Currency Pairs for Forex Trading Success
- AUD/USD: The Aussie Dollar's Consistency. The AUD/USD pair is renowned for its predictability. ...
- USD/JPY: The Yen's Reliability. ...
- USD/CAD: The Loonie's Steadfastness. ...
- NZD/USD: The Kiwi's Dependability. ...
- EUR/USD: The Euro's Stability.
Frequently Asked Questions About Forex Currency Pairs
The EUR / USD is actually the best currency to trade, its the most liquid and cheap to trade and most of the moves are quite logical in a way, the EURUSD currency pair often has a negative correlation with USD / CHF and a positive correlation with GBP / USD.
What is the Usdjpy scalping strategy? ›
Scalping Strategy: Scalping is a popular day trading strategy that involves making multiple trades throughout the day to take advantage of small price movements. Traders can use this strategy for USD/JPY by identifying short-term price fluctuations and placing trades accordingly.
The main driver of this currency pair is not only Treasuries but interest rates in both Japan and the U.S. This means the pair is a measure of risk that determines when to buy or sell the USD/JPY in terms of interest rates. The direction of this pair can be determined by the direction of interest rates.
What does USD JPY correlate with? ›
USDJPY Trading Correlation
Thus, USD-JPY is positively correlated with oil. The pair will usually rise when oil prices are rising and fall when oil prices are falling.
What is the Yen trading strategy? ›
Investors often borrow low-interest Yen to buy higher-yielding foreign assets, like bonds or stocks . This strategy is known as "carry trade." Carry trades create demand for the Yen, boosting its value. However, when markets turn sour, investors rush to sell their Yen, causing its value to drop.
Which forex pair is best for day trading? ›
If using a 1-minute chart for day trading, focus on trading one pair well. The EURUSD is recommended. If it is really quiet for many days (moving less than 40 pips per day), consider trading the GBPUSD or USDJPY. You may opt to trade two or three currencies at the same time.
What is the best time to trade each currency pair? ›
The London - New York Overlap (2:30 pm - 4:30 pm GMT) The European - US overlap is often considered to be one of the best times for trading forex. Trading in all the European currencies is heaviest during this period and offers the most liquidity for currency pairs involving the euro, pound sterling and Swiss franc.
What forex pairs move the most in a day? ›
The fastest-moving currency pairs include the currencies of the most developed countries as base or quote currencies, as they represent the most economic activity. They are the USD, EUR, JPY, GBP, CHF, CAD, and AUD.
When should I exchange USD to yen? ›
Plan to exchange your money at the airport when you arrive. The rates are the same as at the banks, and you want to have Japanese yen once you leave the airport. It is possible to exchange money at major hotels, but the rates are usually not as good.
What time is Japan trading session? ›
Morning session is from 9:00 am to 11:30 am, while afternoon session is from 12:30 pm to 3:00 pm. Orders are accepted from 8:00 am and 12:05 pm for each session. Following days are holidays.
What time does the Japan exchange open? ›
The Japan 225 stock market hours are based on the hours of the Tokyo Stock Exchange, which operates its regular trading session from 9:00am to 3:00am Japan Standard Time (JST). Japan is nine hours ahead of Coordinated Universal Time (UTC+9).
What time of day is best to trade currencies? ›
The London-New York overlap is often considered the most significant and active period in the forex market. Here' are somethings to consider: Timing: This overlap typically occurs between 8:00 AM to 12:00 PM (noon) Eastern Time (ET).
