The session in plain terms
The Tokyo session is the period when Asian financial centres are active and is often called the Asian session because liquidity and price action during these hours reflect activity across Japan, Hong Kong, Singapore and, to a degree, Australia. In universal time the session typically runs from about 00:00 to 09:00 UTC, which corresponds roughly to 09:00–18:00 in Tokyo (Japan Standard Time). Because the foreign exchange market runs 24 hours on weekdays, the Tokyo session sits between the Sydney open and the later European sessions and helps set the tone for the trading day that follows.
During the Tokyo hours you’ll see the biggest activity in currencies and instruments linked to the Asia‑Pacific region. The Japanese yen (JPY) is the obvious focus because Tokyo is a major FX hub, but AUD, NZD and cross pairs involving JPY frequently move during this session as well. The session’s character is usually more subdued than London or New York: moves can be more deliberate, ranges tighter, and liquidity lower — but that quiet can produce specific short‑term opportunities if you understand how the session behaves.
Who participates and why it matters
Market participants in Tokyo hours include commercial banks handling international trade, corporate treasuries executing currency flows, local and regional banks, some hedge funds and central bank operations. Exporters and importers are active because Asia is an important exporter region; for example, Japanese companies converting foreign revenue into yen can create significant intraday flows. Institutional orders and positioning often take place quietly during Asian hours, which is one reason why price can “prepare” for larger moves that develop once European markets open.
The composition of participants matters because it affects liquidity and volatility. Retail trading activity is smaller in this session compared with London or New York, so spreads can widen on less liquid pairs and large institutional orders can move prices more cleanly through ranges than they do during heavily crowded hours.
How the Tokyo session behaves: liquidity, volatility and common patterns
The Tokyo session tends to have these recurring features. Early in the session you’ll often see some reaction to overnight headlines and to economic releases from Japan or nearby economies. After that initial activity, many pairs settle into a range or small trending move. Because overall volume is lower, false breakouts are common; price often “sweeps” stops around obvious range boundaries before resuming the prevailing pattern. Toward the end of the session there is sometimes a pickup in activity as European markets begin to wake up and liquidity starts to increase.
A concrete example: USD/JPY frequently shows its relatively highest hourly movement during Tokyo hours compared with other sessions, because Japanese flows and yen liquidity are concentrated then. On quieter days EUR/USD may only move a few pips per hour in Tokyo, while USD/JPY might move double that. That difference is why many traders tailor their pair selection to the session rather than trading the same instruments all day.
Another common pattern is consolidation during Tokyo after a strong move in the previous New York session. Traders often mark the Tokyo high and low as reference levels: a break of those boundaries as London opens can produce a meaningful continuation or reversal trade.
Practical ways traders use the Tokyo session
Traders adopt different approaches depending on their style. Some use the host of smaller ranges for scalping or short intraday trades with tight stops. Others treat Tokyo as a “setup” session, identifying range boundaries and waiting for the London open to trade a breakout with better liquidity. News traders pay attention to regional releases — for example Japanese economic figures or Chinese trade data — because those can create spikes in JPY, AUD and NZD pairs.
A simple example workflow used by many traders goes like this: at the start of Tokyo hours a trader marks the high and low of the first two hours. If price remains rangebound, they may scalp within that area with very tight stops. If the range holds until the end of the session, the trader will watch the break of the range when London opens; a clean breakout with increasing volume may be taken as an entry, with the stop placed just inside the broken range and a profit target based on the recent average daily range.
Another practical tip is to focus on session overlaps. When Tokyo overlaps with Sydney or with early European hours, liquidity rises and spreads often tighten, making certain entries more reliable. For example, the Tokyo–London overlap (brief toward the session end) can produce stronger moves in yen crosses as European market participants add volume.
Session timing and daylight saving time
Times quoted for sessions use universal reference points but can shift slightly when countries change to or from daylight saving time. Tokyo itself does not observe DST, so the UTC conversion remains consistent for Japan. However, if you convert to your local clock or compare with London/New York hours, be aware that the overlap windows can shift by an hour during DST transitions. Always check a reliable market‑hours tool or your broker’s server time so you trade with correct session boundaries.
Trading setup examples and risk control
A practical entry example during Tokyo hours: suppose you trade USD/JPY. You notice that from 00:00–03:00 UTC the pair has been contained in a 40‑pip range. You mark the two extremes and set an alert for a breakout. If at 08:00 UTC the price breaks the range to the upside while volume begins to increase, you might enter long with a stop below the breakout candle and a profit target equal to one to two times your stop distance. Crucially, before entering you calculate position size so the maximum risk on the trade is a small, pre‑determined percentage of your account (for example 0.5–1%), and you confirm that spreads are acceptable.
Another example for scalpers: you might choose to scalp AUD/JPY during the Tokyo–Sydney overlap because spreads are normally tighter on that cross in Asia. The scalper uses a short timeframe, very tight stops, and aims for small pip gains that are repeatable. This approach requires fast execution and strict discipline on risk.
Whatever the setup, control of position size, stop placement, and an awareness of average daily range (ADR) for the pair are essential to avoid being caught on a sudden move or in low‑liquidity slippage.
Risks and caveats
Trading in the Tokyo session carries the same fundamental risks as any market activity, and some session‑specific hazards deserve emphasis. Lower liquidity can mean wider spreads and larger slippage, especially on exotic or thinly traded pairs; orders may fill at worse prices during sudden moves. False breakouts are more common in low‑volume hours, which can lead to stop‑outs if you place stops too tightly. Weekend gaps — price jumps that occur between Friday close and Monday open — can also cause unexpected losses if positions are held over the weekend. Economic releases from Japan, China or Australia can produce sharp, unpredictable volatility, so it’s important to check the economic calendar and understand the potential market impact before trading news.
Always use risk management: determine your risk per trade in advance, size positions accordingly, and use stop losses. This article is educational and not personalised advice; do not take it as a recommendation for a specific trade. Trading carries risk and you can lose money. Consider practising strategies in a demo account and consult an independent advisor if you need tailored guidance.
How to learn and practise Tokyo‑session trading
Start by observing. Use a demo account or a small live account and watch a few weeks of Tokyo session price action for the pairs you plan to trade. Record session highs and lows, note how often breakouts fail, and measure average hourly movement. Backtest simple rules such as “mark the first two‑hour high/low and trade a breakout only if volume increases” and check their historical win rate and risk/reward. Over time you will refine which pairs and time windows work best with your temperament and schedule.
Key Takeaways
- The Tokyo session (≈00:00–09:00 UTC; 09:00–18:00 JST) is the Asian trading period and often shows the strongest action in JPY, AUD and NZD pairs.
- Liquidity is usually lower than London/New York, so expect tighter ranges, possible false breakouts, and occasionally wider spreads.
- Successful approaches include range scalping, marking Tokyo highs/lows for later breakouts, and trading Asian news — always combined with strict position sizing and stops.
- Trading carries risk; practise on a demo account, use disciplined risk management, and seek independent advice for personal guidance.
References
- https://www.myfxbook.com/market-hours
- https://www.forex.com/en-sg/forex-trading/forex-market-hours/
- https://www.babypips.com/learn/forex/can-trade-forex-tokyo-session
- https://medium.com/coinmonks/asian-session-trading-strategy-the-complete-guide-to-forex-and-gold-trading-during-tokyo-hours-64e50a25b79f
- https://www.avatrade.com/education/trading-for-beginners/forex-trading-sessions
- https://medium.com/@fxmbrand/asian-session-scalping-strategy-optimized-guide-for-forex-traders-3618a283c694