In the foreign exchange market, the 24-hour, five-day-a-week trading window is one of the most frequently mentioned advantages. Even if the market is less busy, some traders may prefer to trade forex at night in an effort to take advantage of the volatility that occurs during the Asian trading hours.

Reasons for trading at night

Night trading is a term that can be applied to a wide range of situations. Variations of time zones around the world are responsible for this. However, we’ll concentrate on the late-night trading hours in Europe, which typically run from 10 p.m. ET when the US market closes to 7 a.m. at the opening of the European markets. Asian trade takes over the show when London and New York close.

The AUDNZD and AUDJPY are essentially the Asian pairs to monitor if you’re keen on trading at night. People who are searching for a lot of market volatility can go to Asian and Oceanic cross-currency pairs. The most popular pairs for night trading in this situation are AUDNZD, AUDJPY, and NZDJPY.

By trading at night, traders get to concentrate more on currency pairs that aren’t as popular with European and American sessions. These present good profit-making opportunities if you use the appropriate strategy and enter the market at the right time. The major pairs are largely dormant in the early morning and late evening hours. During these “off-peak” hours, however, a wide range of minors are available for trade and can see significant price movements.

As a bonus, Asian markets are more amenable to scalping and other low-volatility trading strategies. It’s also less probable that you’ll miss a transaction if there is less activity.

Investors who feel that a major US economic announcement will have meaningful effects on a particular pair can gain an advantage over the competitors by trading in Tokyo/Sydney markets the night before the news becomes widely available.

For night trading, we’ll take a look at some of the top currencies below.

AUDNZD

The AUDNZD currency pair is important because both are closely linked to commodities prices. Although both countries rely heavily on China’s purchasing power for their economic growth, they are not necessarily viewed in the same light. It’s important to keep an eye on global commodity prices, as well as the relationship between the countries and China when trading this duo.

With regards to time, there is a 10 pm to 7 am GMT trading window for the Sydney market and a 10 pm to 6 am GMT window for Wellington (New Zealand). The most volatile time for the AUDNZD pair is between 10 p.m. and 6 a.m. GMT when the two markets overlap.

AUDJPY

Night trading on the AUDJPY pair can be a lot of fun because of the high level of volatility. The yen is closely linked to the US economy, both in terms of technological production and as a provider of services. In general, the yen and US dollar tend to move in the same direction, and the Australian economy is significantly influenced by China’s economic statistics and the US dollar. 

There are two trading hours for the AUDJPY pair: the Sydney market opens at 10:00 GMT and ends at 0600 GMT. The Tokyo session is in business from 12 am to 9 am GMT. This indicates that the best time to trade the AUD/JPY overnight is between 1200 and 0600 GMT when liquidity and volatility are likely to be at their highest.

USDJPY

The USDJPY is one of the most liquid currency pairs in the Forex market, trailing only the EURUSD in terms of turnover. Despite the large volume of trading, the yen/dollar exchange rate rarely changes throughout the day.

As a result, this is the perfect pair for trading at night. When trading USDJPY, the best time to be is between 0800 and 1100 GMT. This is the best time to trade because both London and New York are open. Since spreads get tighter at this time, there’s more money to be made.

As a result, day trading this currency pair is not recommended between 21:00 GMT and 00:00 GMT on the opening day of the Tokyo market. Between the hours of 03:00 and 05:00, the pair shows a significant decline in volatility. This is yet another instance in which it is best to steer clear of trading.

The Bank of Japan (BoJ) exerts significant influence on the USDJPY exchange rate due to its history of market interventions. The Bank of Japan (BoJ) publishes interest rates and associated rate announcements on a monthly basis. These statements give investors and traders a sense of the BoJ’s future policy orientation. In addition, data released by Japan’s Statistics Bureau can have an impact on the USDJPY exchange from time to time.

Also, trade balance, GDP, and the current account are all major drivers of the USDJPY exchange rate because of Japan’s export-oriented economic model. Therefore, be sure to stay alert and keep watch of the macroeconomic announcements that can potentially change the trajectory for the USDJPY pair.

NZDJPY

The NZDJPY pair, which consists of the New Zealand dollar and the Japanese yen, is another prominent yen cross that is traded. Many investors gravitate to the Japanese yen as a safe haven during economic downturns, unlike the New Zealand dollar. As a result, during times of economic uncertainty, the yen tends to appreciate versus the New Zealand dollar.

Because NZDJPY is such a minor currency pair, it is often difficult to buy or sell at the exact time you desire because of low liquidity.

To circumvent this, you should attempt and trade NZDJPY at busy market hours, when both units are generally available. For UK traders, this corresponds to the hours between 10 p.m. and 6 a.m. GMT, when the markets in Tokyo and Wellington are both open.

In summary

To be successful at night trading, you need to know which currencies are the most profitable. Many people believe that Asian sessions are less volatile than those in Europe and North America, but this isn’t always the case.

A wide range of currency pairs can be significantly influenced by significant economic announcements anticipated in leading economies such as China or Australia during the evening trading session.

When trading currencies, the prevailing wisdom is to select a currency whose market is currently active.

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