ASIA - Perfect Training Ground

For the whole of March I traded the Asian session 8 hours a day, and near the end of the month it became apparent to me that the Asian session is a perfect training ground for new traders, because it behaves like a mini version of the London and US session combined. I noticed that after focusing hard on learning to trade the Asian session, the London and US moves were very big and obvious - i.e. it becomes EASIER to trade them once you are an Asian session veteran (I don't count myself in that demographic by the way, but....)

You guys who live in America should perhaps consider this (guys like Rich at Forex Project spring to mind). You could do it a few nights after work or something. I always trade the EUR/JPY pair, which moves quite nicely during the session, and on a big day can move over 100 pips.

Also there is usually a reversal around midday JPY time, which echoes the reversal that happens many times at the London close. You can also trade the news which tends to be less insane than the other sessions.

Just think of the Asian session as being like a mini version of London and New York combined with a smaller ADR.

The pattern I see on a normal day is that it will open, and there will be a down or up move, followed by some range bound trading (where all the volume happens), and then around midday a reversal and move back towards the open. I've watched it do this over and over. At the time of writing the midday reversal is underway...

If there is news, it will be dead until its out, then the market will seek out a new range and trade there. Also, you can consider what happens in London and New York as an influence on Asia so you come into it with SOME indications or vague clues as to what might happen... i.e. if there was a big up move in New York, Asia will often follow suit and trade it higher.

Also after an upmove in the US session watch for a big sell off before the Asian open as day traders in the US session unwind positions (and visa versa in a downmove of course)... This will happen usually between 6.30 - 8.00am JPY time. I've watched it do this pattern day after day. Also watch for a headfake at the open, wait until you are sure of the direction (it does this a lot in the first hour)... I'm not altogether sure why headfakes happen; one experienced trader told me its the banks gunning for stops, but it could also be other things such as overnight trades being unwound, or profit taking. Any number of things. There can also be a profit take at the end of the Asian session, so you have to watch for these things... (see diagram above of a typical day).