Trading the USD/JPY is attracting many people due to the enticing liquidity and low bid-ask spreads. The characteristics of the pair tend to tempt both the experienced traders and beginners. The history of the currency pair in addition to the advantages and disadvantages are provided in the discussion. Besides, the process of starting the day trading of the USD-JPY will be outlined.
The USD/JPY refers to the exchange rate of the Japanese yen and the U.S. Dollar. The base currency in the major paid is the USD. The daily turnover is approximated to be in excess of $900 billion due to the rich volume and volatility. The reason makes the USD/JPY to be the second currency pair most traded around the globe.
The currency pair is also associated with an estimate of 17.7% of the turnover of the daily forex. The Japanese yen is the most liquid form of currency in the whole of Asia. Besides, in the event that the economy is not stable, the option of the traders is either buying or selling the yen. The case is due to the fact that other Asian currencies pose a challenge when it comes to trading. Finally, the yen has low-interest rates hence tends to attract many investors.
There are many advantages of day trading USD/YPY. For instance, one characteristic is the relatively low spreads. The USD/JPY popular because of the bid-ask spreads that are comparatively down. Besides, the currency pain has high levels of volatility, a situation that is made possible by the forces of the Asian market. Due to the named reason, the day traders have many chances of turning a profit.
In addition, the currency pair has a large market volume since the individual currency is the most active in the world. The advantage enhances easier means of getting trading tips and forex signals. The currency pair is also predictable since it is associated with commodities trading in Japan. Due to the case, analysis and research are more open and straightforward. A trader can check at the global exports and imports to test the market sentiment.
The USD/JPY currency pair utilizes diverse trading vehicles. One can utilize numerous trading vehicles to gain profit. The vehicles include E-mini and E-micro USD/JPY futures and ETFs. The pair is also friendly to the beginners. The good liquidity and appealing trends of the USD/JPY currency pair are attractive to both the experienced people and starters.
Finally, the currency pair enhances the availability of resources. The trader has direct access to the average daily ranges, bar charts, graphs showing the history of the exchange rate among many others. It is easier to do the analysis of the Elliot wave. Furthermore, an online trading community exists in the form of blogs. The websites provide up-to-date hourly forecasts and market reviews.
When undertaking the USD/JPY trade, there are rules that need to be put into consideration. The buy entry rules suggest that the BBC (MA20) must be beyond MA (50). Besides the price is required to go above BBC (MA20) and MA (50). Furthermore, the trader should check for the bullish confirmation candle provided by the support. One is finally required to enter a buy or long entry. On the other hand, there are rules concerning the sell entry.
In the rules, the BB (MAC20) is required to be less than the MA (50). The price is supposed to cross below both the MA (50) and BB (MA20). Besides, the price us required to test the resistance of the BB (MA20) while at the same time ensuring that it is below MA (50). The trader should then look for a confirmation candle that is bearish from resistance. The final step involves putting a short or sell entry.
The trader is required to include the stop-losses to reduce the possible risks. A stop-loss should be placed at either top or bottom wick on the confirmation candle. The act, however, depends on whether the trader is either selling or buying. Finally, one should allow the price to go in the direction of the trade.
Upon the moment that the price retest MA (20), the trader is supposed to move the stop-loss to either the bottom or top wick of the candle. The trader should keep doing the same up to the time that the price does not stay below or above the MA (20). The understanding of the global role of the Japanese yen is essential when evaluating the trends in the USD/JPY currency pair.
The market sentiment can be affected quickly by the new market updates concerning the USD/JPY currency pair, a case that can cause shifts. For the reason, the trader should be kept informed through recommendations, live news updates, technical analysis, and monthly forecasts.
The most popular reference resources include Yahoo Finance, Bloomberg, Reuters, Google Finance, Forex Factory, and CNBC. The named sources are recommended as they offer a daily forex outlook and recent USD/JPY forecasts. The resources also provide trading definition and historical prices. Besides the overview of the previous day, the performance and price of the USD/JPY currency pair is also provided.
Best Time to Trade USD/JPY
The USD/JPY currency pair is associated with a volume that is relatively consistent the whole day. However, the pair tends to experience spikes in volatility. Therefore, the best time to trade the USD/JPY lies between 1200 and 1500 GMT. During the named time frame, both New York and London are fully open. Despite the fact that the opening time of Tokyo follows, the highest daily moves occur during the named time range. The period is essential as it allows traders to benefit due to the tightest spreads creating great opportunities to gain profits.
For liquidity, the USD/JPY currency pair takes the second position. The day forex traders are assured a large volume and increased volatility essential in making profits. However, due to the increased competition, the trader is required to have knowledge of the forces in the market. The historical, daily, and weekly charts are vital while conducting the expert analysis. A broker is required to supplement one’s trading style. There is no doubt that if a trader utilizes the advice provided in the discussion, then a lot of profit will be a guarantee.