16.Best forex strategy - Good morning Asia strategy

Forex strategy - Good morning Asia strategy

A fair number of traders prefer to trade the U.S. and Europe sessions of the forex market because they feel that the market tends to be more exciting at those times. These traders consider the Asian session boring and quiet most of the time.

However,  many part-time retail traders who are based in the United States and Europe miss out trading opportunities in the U.S. and Europe sessions because of work or business commitments.  The only time they can trade happens to fall within the perceived boring and quiet Asia session.

Thankfully, now we all know that the forex market is open 24 hours a day. When there are trade-related activities,  there are opportunities.

This time period can provide numerous opportunities for traders located in different time zones across the world, whether they are part time or full time. I hope that it will greet you like the bright morning sun.

Time Frame for forex strategy

The good morning Asia strategy works with the daily candle  (D1). This means that each candle represents 1 day of price movement.

Indicators for forex trading strategy

We use only pure price action, and no indicators are used for this strategy.

Currency Pairs

This strategy applies only to the USD/JPY.

Strategy Concept

Opening hours of the Asian market begin after the U.S. market closes. The direction of the Asian market tends to take its cue from the previous day’s performance on the U.S. market because the U.S. market is the largest economy in the world.

If the  U.S. market closes with a  bullish sentiment,  the  Asian market usually starts the day bullish. If the U.S. market closes with a bearish sentiment, the Asian market usually starts off bearish.

During the early-morning  Asian hours,  the best currency pair to take advantage of this phenomenon is none other than the  USD/JPY,  as the Japanese yen is the only Asian major currency.

This strategy allows you to position yourself just before the opening of the Asian market—hence the name good morning Asia.

The entry time for this strategy is right after the U.S. market closes at 5 P.M. If the previous daily candle is a bull candle, we ride along the momentum to go long on Asia opening. If the previous daily candle is a bear candle, we follow the bearish flow with a short on Asia opening.

We take the low or high of the previous candle as the stop loss. The risk to reward for this strategy is 2:1. If the stop loss is 80 pips, the profit target is 40 pips.

Long Trade Setup forex strategy

For this strategy, the opening and closing of the daily candle correspond to 5 P.M. New York time, which is the closing time of the U.S. market.

Here are the steps to execute the good morning Asia strategy for long:

1. Ensure that the previous day’s candle is a bull candle (i.e., the closing price of the candle is higher than the opening price). (See Figure 10.15.)

FIGURE 10.15    Previous Day’ s Candle Must Be a Bull Candle

FIGURE 10.16    Set Stop Loss and Profit Targets

2. Enter at the opening of the next candle. This is the entry price.

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