Trading Probably the Most Profitable Time Day

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Article SummaryWe discovered that a vital characteristic of our Forex traders would be trading throughout the Asia trading session, and which can be more of an array bound market. A very simple tool to trade such a market is that the Relative Strength Index (RSI), but we will find out to readily recognize the Asia trading session.

A favorite topic of debate on Tradeforyou.com is our analysis to the Traits of Successful Forex Traders. Within this study we found that a lot of the Forex traders were successful when trading throughout the Asian trading session. Within this article we’ll talk about just how to recognize the Asia session onto your own graph, the way to utilize the Relative Strength Index (RSI) to pick admissions and just how to couple the two thoughts together to generate increased chances signs.

When is Asia?

The Asia session is generally characterized between the hours of 5pm to 3am Eastern Time including Sydney and Tokyo trading hours. In that time period there’s an average of low volatility on the marketplace so it may be an perfect moment for you to exploit potential prices ranges.

Learn Forex: The Trading Session Hours Indicator

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This graph definitely divides different trading sessions and that means that you may better recognize the session that you need to trade. You can find 4 major FX trading hubs on earth; London, New York, Sydney andTokyo, also since we’re trying to trade exactly the Asia trading session, and you would like to concentrate around the Sydney andTokyo sessions. It is possible to easily see in the graph how much skinnier the Sydney and Tokyo sessions’ price ranges are. This will be the time of day that is best to look for ranges based on our research data. Next, to generate our trade entries, we will be using the RSI.

Reading the RSI Signals

The RSI is displayed as a value between 0-100, where values above 70 are considered overbought and values below 30 are considered oversold. We want to pay close attention when the RSI surpasses either of these values because that means a trading signal is near. Our trade is triggered when the RSI crosses back below the 70 or crosses back above the 30. See the chart example below.

Learn Forex: Trading RSI Signals

Here are two signals the RSI generated for us, a sell signal followed by a buy signal. You can see it did a pretty good job at signaling when the top and bottom began to turn during this price range.

Tradeforyou has many resources that teach how to filter common signals into higher probability strategies. If you want to learn how else you can filter RSI signals, we invite you to take our free online RSI video course(approx. 10 minutes).

Now that we understand these concepts, we will put these two ideas together to form a cohesive strategy.

Example of Signals During Asia Session

As we’ve learned, the RSI performs well in ranging markets. So if you see price oscillating up and down and in a confined range, this is a great time to use the RSI. During the Asian trading session, we’ve learned that we will often see this type of price action. So let’s take a look at a chart using both tools.

Learn Forex: Trading the RSI during a Ranging Market

This example is a 5-minute chart of the GBP/USD. You should first notice that we drew two vertical lines to rope off the Asia trading session that we are wanting to trade. We only want to take trades during the Sydney and Tokyo time blocks. Next, we look for the RSI to provide us with our entry signals. Notice the two signals provided during this Asia session, an early sell signal and later a buy signal. The RSI provided both of these successful entries during this ranging market almost perfectly. These are the type of setups we are looking to take advantage of and are fairly easy to spot once you’ve practiced a few times.

Range Trading the Asia Trading Session

You should now be comfortable with employing this strategy as well as understand the logic it is based on. We’ve learned that most of our traders are more successful when they trade during the Asia trading session (a ranging market environment). And we also learned that the RSI can be an effective tool to pick tops and bottoms in ranging markets. Therefore, combining these two ideas could produce a more consistent Profit/Loss on our account. Good luck with your trading!

–Written by Rob Pasche

To contact Rob, email [email protected]

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