USD/JPY - characteristics and features of the currency pair US Dollar Japanese Yen – trading in Malaysia

There are some fundamental characteristics of the U.S. dollar and Japanese yen currency pair. The U.S. dollar is generally stronger than the Japanese yen in most economic circumstances. 

In most economic situations, the major currency pairs, the U.S. dollar and the Japanese yen, trade similarly. There are exceptions to this rule. When a special event occurs, such as a holiday in the US, the yen sometimes takes a negative turn. This could be due to the political situation in Japan at the moment. To see which of these currencies is currently strengthening, you can use a chart of the major payers. In most cases, the U.S. dollar is stronger in a positive turn compared to the Japanese yen.

Another peculiarity is that both major pairs have high liquidity. This means they can be easily traded on online exchanges. This ease of trading makes it accessible to all investors. It's also a good market to enter if you don't know much about economics or the psychology of currency exchange. You can make a lot of money here on a variety of transactions.

One of the main features of the U.S. dollar and the Japanese yen is that these currencies are not subject to much depreciation when they are in an economic downturn. This is a result of the strong status of the U.S. dollar in international trade. It is the result of long-term interest rates in the U.S. 

Currency pair information
Currency pair information

What are currency pairs? A currency is a monetary unit denominated in a particular currency. Most major currencies are traditional currencies, which include the U.S. dollar, Canadian dollar, British pound sterling, euro, Swiss franc, and Japanese yen. Money is depreciated by the governments of various countries. 

In financial markets, major currencies are always bought and sold in pairs. For this reason, currency rates always have a particular form. A good trader carefully studies the charts to determine which of these pairs has the most potential for price increases at a given time. Once a trader has an idea of what these currencies look like on the charts, he or she can decide if the currency pairs he or she is interested in are suitable for trading.

Currency prices 

Currency prices are a major topic of conversation every day. Traders and investors ask themselves what will happen to the value of the Japanese yen next if it moves down against the dollar. They keep reminding us in economic news headlines that the dollar usually either rises or falls against other major currencies, but very few really know what causes currency prices and how they can affect the world economy. 

One factor that affects currency prices is the trade balance between countries. For example, when the trade balance between the U.S. and Japan changes, it affects oil prices. In the country with the largest trade deficit with the U.S., oil prices usually go up because Japan needs more oil to produce its export products. Japan sells more oil to the rest of the world to settle its current deficit. This can have a significant impact on oil prices. Keep this in mind when considering how to trade the market, and consider whether one currency or the other has advantages or disadvantages over the other.

Economic events
Economic events

Another important factor that traders and investors consider when trading the market is the state of foreign currencies. Most traders focus on the American dollar or the European euro as their main trading currencies. In addition, there are other major currency pairs, such as the Japanese yen and the Australian dollar. Market trading is very similar to commodity trading, and there are several types of tools that are used to track the movement of these currency pairs.

There are many different factors that can affect currency prices, including political and economic events. Investors and traders rely on macro factors such as inflation, trade restrictions, and exchange rates. Microeconomic factors such as consumer sentiment, business cycles and interest rates can also affect the price of a particular currency. Traders and investors make large profits when they notice trends in these macro factors. Ultimately, these profit opportunities open up profit taking opportunities for those who buy short positions in currencies that fall in their favor.

The relationship between floating exchange rates and international business cycles is complex. In its simplest sense, a floating exchange rate indicates the tendency of the value of a particular currency to fluctuate in the world market. For example, the U.S. dollar index tends to follow the general trend of other currencies. This type of chart reflects the general trend of all U.S. dollars. As you can see, macro factors such as inflation, trade restrictions and other government policies affect the movement of floating exchange rates around the world.

Another factor that can affect the value of a particular currency is the political environment. The value of currencies is strongly influenced by political conditions in different countries. It is not uncommon for some countries to have closer economic ties with other countries, causing their currencies to appreciate against the currencies of other countries. This serves as a profitable trading scenario for many traders and investors. The value of a currency is usually closely tied to how well other countries are doing economically. 

Trading Timeframes

Time frame theory basically states that you should trade on one of your preferred time frames if you want to profit in the market. However, if you think about it, what is the ideal time frame for trading? What risk/reward profiles should you consider when trading? How do you know when is the best time to enter or exit the market? There are different time frames, and traders can benefit by choosing to trade one or more.

Choice of currency pairs
Choice of currency pairs

Short time frames are known as M1 - 1 minute, M5 - 5 minutes. The term "short" refers to the length of time you will trade before suffering a loss. Longer time frames, M lasting from 5 minutes to several hours, are known as long time frames (M15 - 15 minutes, M30 - 30 minutes, H1 - 1 hour, H4 - 4 hours). Short timeframes give less freedom for trading, but the profit is, as a rule, smaller, too.

M1 is the smallest of all timeframes. Its duration is the shortest of all timeframes. The M1 can be traded at great risk given its short duration, but it leaves considerable room for profit maximization. Traders can enter and exit the market within one minute, but they are not allowed to trade longer than one day.

H4 is the average time frame which is considered to be the ideal place to trade. The duration of H4 is one to four hours. This means that profits and risk are average. A good example of trading using H4 is during the US dollar strengthening session, which can last up to a week. 

W1 is the most bullish of all timeframes. It lasts for a week and is the second most bullish of all timeframes. W1 gives traders the greatest likelihood of making profits on weak sections of the market, as it is considered the most concentrated timeframe.

Here is a list of all timeframes, for your convenience:  

  • M1 - 1 minute;
  • M5 - 5 minutes;
  • M15 - 15 minutes;
  • M30 - 30 minutes;
  • H1 - 1 hour;
  • H4 - 4 hours;
  • D1 - 1 day;
  • W1 - 1 week;
  • MN - 1 month.

Trading Strategy 

There are many different strategies, each trader chooses for himself one particular one or uses several of them, the main thing is that you should be comfortable in using it and you should understand how you can make money with it. 

A carry trade is a trading strategy that involves selling or borrowing a certain financial instrument at a lower interest rate than the one you currently own and then buying a more expensive financial instrument at the same lower interest rate. A carry trade makes sense in a world where interest rates are at historic lows or historic highs. Buying an expensive financial product when you have leverage (a low-interest loan) can allow you to take advantage of the market and help you save money in the long run. However, this strategy can also work in the opposite direction. If you take out a larger loan and use the extra funds to pay off your existing debt, your overall return on investment can be much higher. Therefore, this strategy is often used by those who have significant debt and would like to reduce their interest expense.

News about the USD/JPY currency pair
News about the USD/JPY currency pair

One specific example of a hedging strategy is the so-called "put trade." A put order is similar to what we know as a call option. A put order is created when you buy a certain financial product at a certain price (at a certain time), but do not pay for it until you sell it. Thus, you're not actually buying a security or product at the strike price, but holding a position on it - hence the term "put trading".

Many people use these types of strategies when they are either trying to hedge their short-term trading portfolio or are simply trying to protect their long-term trading portfolio. For example, some people may be concerned about the risk of investing in the stock market and therefore hold long positions (or put a stop loss on a trade) even when the market is bullish. Such traders can use these strategies to compensate for some of their risk by offsetting their losses with profits. In addition, if they want to take advantage of short-term stock market trends for profits, they can trade them as well.

There are many different types of trading strategies that can be used in the stock market, and each has advantages and disadvantages. However, it is important to remember that choosing a strategy depends a lot on your character. If you tend to be a more aggressive investor, you may want to consider a more aggressive style of investing. If, on the other hand, you are more patient and calm, you may want to choose a more passive style of trading.

Whatever strategy you choose, make sure you are disciplined enough to stick with it over the long term. Many people are comfortable with a small portfolio, but if you're not disciplined enough to stick to your plan, you could find yourself out of business before you get another chance. Also, if you take the time to learn about risk management and asset allocation, you can turn a relatively small investment into a significant one. A high-risk strategy may not seem worthwhile if you're not going to stand up to the risk, so make sure you're comfortable with the potential losses associated with your strategy. 

Peculiarities of the currency pair USD/JPY 

Many investors are not aware of the features of the currency pair USD/JPY. One of the important features of this currency pair is a daily range, which correlates with the historical lows and highs. Another important feature is the correlation between technical and fundamental factors. Let's discuss some other important features of the currency pair.

USD/JPY has a very strong correlation between technical factors and the daily range. The daily range is highly correlated with the closing price of the last trading day on the market. In other words, the higher the daily range, the higher the closing price compared to the opening price. The correlation between historical lows and highs is very strong in the USD/JPY pair. Although there are some exceptions, most pairs exhibiting this feature have highs and lows that correlate with historical lows and highs of the price.

USD/JPY trading conditions
USD/JPY trading conditions

The second feature is the news characteristic of the currency pair. When news about the U.S. economy or any event that can affect international financial markets comes out, the U.S. dollar goes down immediately. The other currency is affected by the news, reducing its value. This feature is not observed in all pairs.

The third characteristic is the characteristic of economic conditions. Historical lows and highs are related to the economic conditions in the US. When economic data is released, it immediately affects the international money markets. In the case of the USD/JPY, current economic data indicates that market conditions are currently pointing to a slight downtrend. The range is also fluctuating and there are no long term patterns. To conclude that USD/JPY has higher volatility than other currency pairs, current economic data is the main characteristic.

Forex pairs listeng
Forex pairs listeng

The most important characteristics to pay attention to in the USDJPY pair are interest rates, news, the history of the currency pair and technical analysis. The U.S. dollar has a low interest rate, which is the main reason for strengthening the pair. On the other hand, Japanese economy is experiencing a serious uptrend. Two major indicators to consider for the relationship between the two currencies are interest rates and the Japanese economy.

Low interest rates are linked to global financial institutions. They lower interest rates to profit from increased demand for their loans. If banks raise interest rates, it will lead to radical changes in the financial sector. The two main factors that contribute to the stability of the U.S. dollar and the Japanese yen are stable economic conditions in both countries. In addition, there is a strong economic foundation supported by the government.

USD/JPY currency pair chart
USD/JPY currency pair chart

Economic indicators such as gross domestic product (GDP) and the unemployment rate help to determine whether a country's economic situation is booming or stagnant. It is important to note that as a country's economy fluctuates, the exchange rate of currency pairs also undergoes changes. If inflation is high, it will lead to a strengthening of the U.S. dollar. Conversely, when inflation is low, it will be difficult for the Japanese to keep the economy on the rise.

Key features of the U.S. dollar include the central bank's decision to weaken the interest rate. This will reduce demand for the currency, which will cause the exchange rate to fall. In addition, lower interest rates will force companies to invest more in the U.S. to improve the overall economy. The trade balance between the two countries is also a major factor in determining the value of the U.S. dollar and the Japanese yen. If a country has a healthy trade balance, the U.S. dollar is considered undervalued, while a country with a negative trade balance indicates a high valuation.

How to start trading USD/JPY in Malaysia 

When you've decided to open a trading account in Malaysia. The important moment is to choose a trading platform that suits your requirements. There are many online brokers in Malaysia that you can open an account with. However, not all of them may be genuine and legitimate to open an account. You need to find out which ones are genuine and have good reviews from other traders so that you can open an account.

You will find that the trading market is not like stock markets or commodity markets, where you can easily make a profit. To succeed in trading, you will have to put into practice the principles of proper money management. The trading market operates around the clock. You have to be awake at all times and you can't just sit back and watch the market.

One of the important things you need to know about starting to trade USDJPY in Malaysia is that you need to learn the basics of trading very quickly. One of the reasons why most foreign investors fail in this business is because they don't have a complete understanding of the basics of trading. If you are serious about making money in this business, you should never pass up an opportunity to learn more about the basics of trading.

Registrating on the investing platform
Registrating on the investing platform

Once you find the right broker, you will need to go through the step of registering on their trading platform, it is not a complicated process that will not take you much time. 

After registration, you can open a real account by funding it with an initial deposit or you can start with a demo account, which already has dummy funds. A demo account gives you the opportunity to practice and become familiar with all the features of the trading platform. Brokers provide such an account so that you can familiarize yourself with trading at your own pace and work out your strategy. 

Your procedure is very simple: 

  • Decide on a broker. 
  • Register on the trading platform. 
  • Practice on a demo account. 
  • Switch to a real account with an initial deposit. 
  • Start making profit on your first day trading.
SIMPLE AND RELIABLE
MONEY WITHDRAWAL
Skrill
Neteller
Mastercard
Visa
Maybank
RHB Bank
Hong Leong Bank
CIMB Bank
Public Bank
AmBank
Astropay