Lesser-Known Currencies Worth Trading

01/10/2012 3:00 pm EST


Stanley Dash

Vice President of Applied Technical Analysis, TradeStation

Asia-Pacific currencies like the Japanese yen and the Australian and New Zealand dollars are highly liquid and offer many benefits to US-based traders, explains TradeStation’s Stanley Dash.

One of the beauties of trading forex is that you can trade 24 hours a day, Sunday through Friday, but what hours are actually the best times of day to trade different types of currencies? 

Our guest today is Stanley Dash from TradeStation to talk about that. Stanley, most currencies kind of start with the dollar or the euro, but there are other opportunities out there.

Sure there are. The major pairs are very important, and certainly there is plenty of action there now with events going on in our world. 

A lot of people want to be able to trade during hours other than when they’re involved professionally or with their other business. That’s one of the attractions to the forex market. We’ve been getting a lot of questions about trading essentially the Asian business day.

In TradeStation, of course, we have pairs related to the Australian dollar (AUD), Japanese yen (JPY), and New Zealand dollar (NZD). Those are some of the most active, and Americans tend to overlook those.

See related: Intro to Trading the Japanese Yen

We did some studies on those currencies, and we try to analyze the volatility during certain periods of the 24-hour day. There’s no pat answer to the question, but we try to give our clients an idea of where the volatility is—positive volatility—and trading opportunities during those times because for an American trading during the Asian hours, it may not be ideal to be trading sterling or euro because it’s not the business day in Europe.

So where should I start? What Asian currency is a good get-your-feet-wet type of trade that I can start looking at?

The yen was one I mentioned, and that’s of course a huge economy despite whatever issues many economies are having. Japan is very dominant.

Australia has come on the scene lately through commodity price rises we’ve seen over the last number of years.  There’s plenty of volatility, but Australia has certainly become a major player.   

New Zealand is probably more active than many people stop and think about. We tend to overlook it a little bit.  Although its economy is not huge, it does have a major banking role in Asia. 

Those are really the three to triangulate against each other and perhaps against the dollar: Australia, Japan, and New Zealand.

Alright, and if I’m using or am comfortable with certain moving averages on the dollar or the euro, can I then transfer that and try the same thing over there?

Yeah, I would do the same technical analysis. Technical analysis should be fractal; it should apply to all time frames and all markets. 

What I think is important to be aware of is some of the volatility changes at different times of the day, because it may be a 24-hour market, but it may not give you the same opportunities during those 24 hours. 

You want to focus in on those hours and those kinds of pairs that we talked about and still apply the same analysis that you’re using, and just be careful about the data and how the world turns.

Eastern time, what are we talking about as far as the sweet spot for trading those hours?

In US Eastern time, we’re really starting at about 6 pm or 7 pm US Eastern time; that’s when the day is beginning in Tokyo.

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