There are some currency pairings that are better suited for night trading. Every time you trade currencies, it is common practice to select an asset that is currently experiencing high trading activity.

As a result of this, many forex trading platforms will have bigger spreads throughout the evening hours. Traders need to keep an eye on this. Reduced nighttime trading leads to a decrease in liquidity.

The rationale for trading at night

The working schedules of each trader are different. Traders generally refer to Asian trading hours as “night hours.” Even Asian traders commonly use this phrase, despite trading taking place there during the day. This is because the session experiences significantly low market liquidity compared to other major sessions.  

The Australian dollar is the most volatile currency throughout the Asian trading session. As a major contributor to Australia’s GDP and a major source of the country’s exports, the mining industry responds fast to changes in the global commodities market. Therefore, AUD reacts quite fast to changes in commodity prices.

In addition, the Reserve Bank of Australia’s calendar provides an indication of the volatility that may be expected in the future. Other regional currencies in Asia, such as the Hong Kong dollar (HKD) or the New Zealand dollar (NZD), may be affected by significant economic events that originate in Australia.

Another currency that plays an important part in the Forex market is the Japanese yen (JPY). When the Bank of Japan (BOJ) announces adjustments in its monetary policy or a detailed report on the status of the Japanese economy is issued, the yen tends to fluctuate quite a bit during the Asian trading session.

In reality, you can trade any currency you wish at night. But the level of risk you are willing to take and the approach you are employing are the two most important factors that should help you determine whether or not you should trade the currencies at night. A great opportunity for both long-term investing and short-term strategies like scalping exists while trading forex at night.

The big forex pairs are the best to trade at night for novices. Because they don’t include an Asian currency, these combinations are likely to be less volatile at night.

There’s a general rule of thumb that markets tend to move more in London and the New York sessions than in Asia. There’s a great chance that Asian markets would correct overnight if the EURUSD pair finished near the resistance level in the US session today.

Horizontal and trend-reversal corrections are the two main types of price movements during the Asian session. As a result, the Asian trading day presents an opportunity to add to any market correction.

Trading volatility

Asian and Oceanic cross-currency pairs are the greatest bets if you’re seeking a high degree of market volatility. AUDNZD, AUDJPY, and NZDJPY are the top night trading pairings in this situation.

Scalping

Another incentive to trade at night is that Asian markets are more favorable to tactics that capitalize on minor price swings such as scalping and automated trading systems. The probability of missing a trade on narrow fluctuations is also reduced because of the decreased activity.

With regard to long-term strategies, night trading is a good option for early entry. For example, if the United States is scheduled to release a large economic statement, the impact will be seen early during night trading.

AUDNZD

Since commodities prices affect the value of both currencies, the AUDNZD currency pair is particularly interesting. Australia and New Zealand are largely reliant on China for their economic development as a result of their geographic location. China is the largest buyer of its goods.

They are, however, rarely seen as one and the same thing. This means that while trading the AUDNZD pair, you should keep an eye on global commodity prices and trade numbers between these two nations and China, as well as their intergovernmental relationship between them and China.

USDJPY

The USDJPY pairing may seem strange to some. However, despite the large volume of trading, the dollar/yen exchange rate seldom changes during the day.

So this is the perfect pair to trade at night. USDJPY trades are best executed between 8:00 and 11:00 Eastern Standard Time (EST). The largest price swings will occur during this time period since the London and New York sessions will be open. The result is increased profit potential, as spreads are narrower during this period.

EURUSD

When a forex market is up for business, currency pairs involving the local currency tend to see higher trading activity.

This means that the optimum time to trade the EURUSD pair is while both European and New York markets are open. So, despite the fact that the EURUSD is a fantastic trading pair during the day, it is not a good option for night trading.

In summary

Trading at night has a lower degree of liquidity than during the day. As a result, the spreads are wider than normal. Volatility in the market and the impact of economic data are different in each trading session. Brokers can’t get the best prices from liquidity providers at night since they don’t have the capacity to do so.

Two things must be taken into account when looking for the ideal currency to trade at night. It’s important to know what time zone the trader is in. Second, the economic calendar aids traders by providing suggestions on the anticipated market move the next day while looking for Forex pairings to trade at night.

 

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