Moving into trading the Asian market schedule but surprisingly can’t get a firm answer on when the Tokyo Forex Session starts exactly. To wit,
Babypips lists Tokyo open in Summer (Daylight Savings) at 8:00 EDT (www.babypips (dot) com/learn/forex/forex-trading-sessions)
Yet other sites – www.forexmarkethours (dot) com/ and forex.timezoneconverter (dot) com/?timezone=America/New_York;#ForexTimeConverter – list the Summer open time for Tokyo as 7:00 EDT.
And don’t get me started on the discrepancies on the Sydney open times.
Anyone got the definitive open time for Tokyo Forex Session? I’d greatly appreciate it. Thanks.
Note: I did search the forum for this answer already and was surprised to find that over time the Babypips forex session times grid listing has been inaccurate (as pointed out by Clint over the years) . But did not find any posts relating to the different reported session start times for Tokyo on different forex web sites.
Sorry you had to wait so long for a reply to your post.
The short answer
The short answer to your question is that there is no “firm” or “definitive” time for the opening of the Tokyo Session. Instead, there are opinions (which vary from 5 pm to 7 pm EST) about when to arbitrarily specify the opening, along with reasons and rationales for why each opinion represents the best choice.
7 pm New York time (EST) in the winter, and 8 pm New York time (EDT) in the summer, represent the best choices in my opinion. And I’ll give you my reasoning, while trying not to get too deep into the weeds regarding time zones and cultural factors.
The long answer
Here are the facts and analysis which lead me to conclude that 7 pm EST and 8 pm EDT best describe the start of the Tokyo Session. First, some time zone considerations —
The U.S. switches back and forth between standard time and daylight saving time, twice each year, but Japan and mainland Asia remain on standard time year-round.
During northern hemisphere winter, the time difference between New York (EST) and Tokyo (JST) is 14 hours.
During northern hemisphere summer, the time difference between New York (EDT) and Tokyo (JST) is 13 hours.
7 pm EST and 8 pm EDT correspond to 9 am in Tokyo (in the GMT+9 time zone) and 8 am in Singapore and Hong Kong (in the GMT+8 time zone) during northern hemisphere winter and summer, respectively.
Singapore and Hong Kong are mentioned here, because together Singapore and Hong Kong transact considerably more forex trading volume than Tokyo — more than 3 times as much, in fact.
Traders in Japan, like traders everywhere in the world, are able to trade around the clock. However, the heavy hitters in Japan tend to await the opening of the Tokyo Stock Exchange (at 9 am Tokyo time) and the “opening” of the forex markets in Singapore and Hong Kong (also at 9 am Tokyo time), before taking major positions in the Tokyo FX market.
For years, before Singapore and Hong Kong began to eclipse Tokyo in FX volume, all the trading occurring in Asia was referred to as the “Tokyo Session”, and that traditional terminology has continued.
Although Tokyo is no longer the 600-pound gorilla of Asian FX, the world’s major FX-trading banks (the mega banks that make up the top tier of the interbank network) continue to use Tokyo as their Asian base. This tends to perpetuate the use of the term “Tokyo Session” to describe all the trading during the daytime in Asia, even though other markets have surpassed Tokyo in volume, and therefore importance.
It’s important to know how large and geographically dispersed the Asian market really is. It’s more than just Singapore, Hong Kong, and Tokyo. Three small- to medium-size Asian markets (Shanghai China, Seoul Korea, and Taipei Taiwan) are in either the GMT+8 time zone (the same time zone as Singapore and Hong Kong), or the GMT+9 time zone (the same time zone as Tokyo), so those three smaller markets don’t complicate the question of trading session times in the region.
However, those smaller markets make it seem appropriate to start referring to the “Asian Session”, rather than the “Tokyo Session”. But, either label will do, as long as we know that the label refers to all of the Asian markets (Singapore, Hong Kong, Tokyo, Shanghai, Seoul, and Taipei) which are trading essentially simultaneously.
Each attempt to specify “opening” and “closing” times for the Tokyo Session must account for Australia and New Zealand. Specifically, there are two choices: Either (1) Australia and New Zealand constitute a separate trading session — the Sydney Session — several time zones ahead of Tokyo, or (2) those two countries are part of a larger Asian Session — which more properly should be called the APAC (Asian/Pacific) Session.
Those who would divide the 24-hour trading day into just three sessions — Tokyo, London, and New York — must explain the 2- or 3-hour time gap between the close of the New York Session (at 5 pm NY time) and the start of the Tokyo Session (at 7 pm or 8 pm NY time, depending on time of year). Otherwise, to close that gap, they would have to claim that the Tokyo Session opens at 5 pm NY time, which is 6 am or 7 am Tokyo time, depending on time of year. I used to be in this camp.
On the other hand, those who divide the 24-hour trading day into four sessions, including the Sydney Session, can point to the slight bulge in worldwide trading volume that typically occurs between 5 pm and 7 pm (or 8 pm) NY time as the portion of the Sydney Session when Australia and New Zealand are essentially trading alone, prior to the opening of the Tokyo Session. This is the interpretation that I now favor.
During the first hours of the Sydney Session, traders in Australia and New Zealand (as well as other traders around the world trading in that time period) tend to defer, to a considerable extent, to the much greater market strength of Singapore, Hong Kong, and Tokyo — markets which are about to open — in much the same way that Tokyo tends to defer to Singapore and Hong Kong (as mentioned above). Consequently, the impact which trading has on prices and volumes during those early hours of the Sydney Session tends to be slight, as most traders wait to assess the beginning of the sessions in Singapore, Hong Kong, and Tokyo, before taking massive positions. Then, after the Tokyo Session gets underway, trading in Sydney and Wellington reinforces trading in those larger markets. In other words, there is a Sydney/Tokyo Session overlap.
Here is a map of the part of Asia we are focused on. I’ve marked the significant APAC markets with red circles. The circles are approximately proportional in size to the FX volumes traded in the circled locations.
To summarize, there are four sessions in the 24-hour trading day. In addition to the London and New York Sessions, the two discussed here are the Sydney Session and the Tokyo Session, as follows:
The Sydney Session begins when the forex market opens at 8 am in Wellington, New Zealand
(2 pm EST in New York during northern hemisphere winter).
The Tokyo Session begins when the forex markets open at 8 am in Singapore and Hong Kong, and the Tokyo Stock Exchange opens at 9 am in Tokyo — these times all corresponding to 7 pm EST in New York in the winter.
The early hours of the Sydney Session overlap the tail-end of the New York Session. The later hours of the Sydney Session overlap the first half of the Tokyo Session.
The combined Sydney Session and Tokyo Session can be referred to as the “APAC Session”, as long as it’s understood that the APAC Session is a combination of two (of the four) sessions, and not a separate fifth session.
On a lighter note, yen prices and yen pip-values are confusing. So, it’s entirely appropriate that the opening and closing times of the Tokyo Session should be confusing, as well
p.s. — does that wood-clamp on your head help you trade better? — It looks like it hurts!
Thanks so much for the incredibly thorough and detailed response. I really appreciate the time you took to lay out the full explanation. What you say makes a lot of sense to me. I had previously been aware of the debate between Tokyo Market Open 8am vs 9am local time question – but was not aware of the effects of the other Asian markets and that their trading volume, having surpassed Tokyo’s, had such a weighty influence on the Tokyo (Asian) open and near open time frames. Your argument makes a lot of sense. I am inclined to go with the 9am open time for this reason.
Thanks again! Very grateful for your sharing your expertise and experience.
Best, Dergol
P.S. As for the wood clamp – yes, it does hurt. Very much! But it helps me concentrate. Besides you get used to it.
