The Forex 3-session Trading System Explained

I have many years of experience in the forex industry having reviewed thousands of forex robots, brokers, strategies, courses and more. I share my knowledge with you for free to help you learn more about the crazy world of forex trading! For traders located outside of Asia, the time zone difference can pose challenges. The Asian session often falls during nighttime or early morning hours in other regions. This can make it difficult for traders to actively participate in the market during this session.

  1. When liquidity is restored to the forex (or FX) market at the start of the week, the Asian markets are naturally the first to see action.
  2. For trend traders looking for higher volatility, currency pairs like AUD/NZD, AUD/JPY, and NZD/JPY can offer potential opportunities.
  3. The most actively traded currency pairs during this session are the USD/JPY, AUD/USD, NZD/USD, and the AUD/JPY.
  4. This creates a prime opportunity for traders to take advantage of potential price movements through various trading strategies.
  5. The stop loss was just above the breakout; the reason for the smaller stops is that the holding below the breakout line confirms the stability of the breakout.

It’s important to note that while these currency pairs are popular during Asian trading hours, they may not necessarily be the best options for every trader’s strategy. You should conduct thorough research and analysis before deciding on which currency pair(s) to trade. Traders should consider factors such as their risk tolerance, market conditions, and technical indicators when making their decisions.

Liquidity and Volatility during the Asian Session

Traders who focus on longer-term strategies or utilize automated trading systems can take advantage of the Asian session’s lower volatility and liquidity. They can set up trades before going to bed and wake up to potential profits or losses. When trading currencies, a market participant must first determine whether high or low volatility will work best with their trading style. Trading during the session overlaps or typical economic release times may be the preferable option if more substantial price action is desired. The next step would be to decide what times are best to trade, accounting for a volatility bias.

In this business, you could experience losses and may wash out your initial investment. That is way it is important that you have to invest only a potion in which you can afford to lose. Be advised that you should be familiar of the risk factor with foreign exchange and may consult financial advisors if you are in doubt. Due to the low liquidity in the Asian session, large traders will look to trigger stops through push above resistance or below support.

It is also important to maintain discipline and avoid emotional decision-making. As volatility and volume surge, prices tend to break out of the Asian session’s consolidation phase. It is precisely this breakout opportunity that our Asian Session Breakout Strategy aims to capture. Range trading is likely to be less effective when the London and US sessions flood the market with liquidity. The chart reflects this, with the large breakout towards the downside before recovering back within the channel.

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You can take data from the Asian session and use it in the London session to take an entry, and the volatility and strength of the US session help you to exit your position at more significant gains. This is the beauty of this strategy, which makes you active in all the sessions. The more you use this strategy, the better your trading will be, and the deeper understanding you will have of all the trading sessions. Economic news releases from Asian countries can have a significant impact on the currency markets during the Asian session.

A trader will then need to determine what time frames are most active for their preferred trading pair. Asian (Tokyo) trading session is not as liquid and volatile as other major sessions, however, it remains highly popular, because Japan is the third-largest trading asian session forex trading strategy center in the world. The yen is the third most traded currency, which volume is participating in almost 17% of all transactions. The below image represents our entry, exit, and take profit in this pair; we took entry when price action holds above the breakout line.

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Range trading involves identifying support and resistance levels and trading within the range. Traders can use technical indicators such as Bollinger Bands or Moving Average Convergence Divergence (MACD) to identify potential entry and exit points. The forex market is known for its 24-hour trading cycle, allowing traders from all over the world to participate in the market at any time.

We believe you know that London is the most significant trading session in the market, which provides where most of the traders around the globe, bankers, and institutions trade the market. In the London market, most of the currencies show a lot of volatility, and you can trade all of it, but it is advisable to give preference to the GBP, CHF, USD, and EUROS. With every trading strategy on this site, you must do your own testing and this Asian session breakout strategy is no different. Refer to this Forex chart  below when you go over the rules of this breakout trading strategy.

Traders should monitor the news announcements, use technical analysis, and use popular trading strategies like the Tokyo open strategy, momentum strategy, and carry trade strategy. Trading the Asian session forex requires discipline, patience, and a sound trading plan. With the right mindset and approach, traders can take advantage of the opportunities offered by the Asian session forex.

A short signal will be triggered when price breaks 5 pips above the master candle’s high. A long signal will be triggered when price breaks 5 pips below the master candle’s low. Thanks to their low volatility, the Sydney and Tokyo sessions are often combined under the one banner and referred to as the Asian session. These pip values are the mid range of past data and they vary according to the liquidity and other market conditions.

Pay Attention to Economic News:

Additionally, announcements from other countries in the region, like Australia or New Zealand, could also affect related currency pairs. Implementing a solid risk management plan is also crucial in any trading strategy. Setting stop loss orders to protect against potential losses and taking profits at predetermined levels are effective ways to manage risk during the Asian session.

The Asian session is known for its lower volatility compared to other sessions, but it doesn’t mean that there aren’t opportunities to take advantage of. In fact, with the 20 Pips Asian Session Breakout Forex Trading Strategy, you can take advantage of the price movements that do happen. Range trading is particularly suited to the Asian trading session as support and resistance levels are adhered to more frequently than during the more liquid London and US sessions. The best currency pairs to trade during the Tokyo session will depend on the individual trader and strategy employed. Traders looking for volatility will tend to trade Japanese Yen, Singapore dollar, Australian dollar and New Zealand dollar crosses.

While the London open is the most important part of the day, the entire New York session is more of a slow-burn. As the New York session is positioned this way, end of day/end of week flows make it somewhat unpredictable. While you may miss the boat on some trades, you’re going to offset that long term, by experiencing a higher winning percentage.

Here are some tips on how to trade the Asian session forex:

During the Asian session, a lack of significant momentum makes this strategy useless. Scalping for the Asian session works in the opposite direction from the breakouts and can bring profits even during low volatility. Implementing effective risk management strategies such as setting stop-loss orders can help limit potential losses if false breakouts do occur.