Trades made on financial instruments usually involve very high risks. This includes the risk of losing all or some of your investments. Huge profits can also be made from a single trade when predictions favor the trader. Before getting involved, traders should be well informed of the risks involved, especially the risks in trading Financial instruments.
The NZD/JPY is a popular currency pair in the financial market, and it denotes the price of the New Zealand Dollar against the Japanese Yen. That is the number of Japanese Yen needed to buy one New Zealand Dollar. For instance, when the current price of NZD/JPY is at 90.00. This means that 90 Japanese Yen will buy one New Zealand Dollar pair. This also signifies that NZD is the base currency. And JPY is the quoted currency.
The NZD/JPY Currency Pair
The NZD/JPY is the most traded currency pair on the forex market. They get used more for low-priced carry trades.
The Japan and New Zealand currencies are the most successful pairs globally. They are one of the most traded currency pairs every day.
The third most traded currency in the world is the Japanese Yen. It got created to unite the divided economy of the Meiji era.
This was in Japan in 1871, and the bank of Japan issues it. It is otherwise called a “safe haven” currency.
This is because of the economy of high stability and low inflation. It gets used more in Asia for trade operations. It contributes to economic growth as it supports a low exchange rate.
It is also a popular pair in the forex market for low-interest trades. JPY is a very volatile currency pair that is always affected by the trade market.
The 10th most traded currency in the world is the New Zealand dollar. It got introduced in 1967. This was after the collapse of Bretton Woods. It became a free currency with high volatility. It gets used more for trades because New Zealand encourages high-interest rates. The NZD market depends more on food trade as their commodity export.
The New Zealand currency is also one of the most stable and flourishing globally. The price of the NZD affects most of the forex trade market. Japan imports most of its dairy products, making up 6.3% of New Zealand’s total exports. New Zealand imports vehicles which make up 0.47% of Japan’s total exports.
The currency pair of these currencies get affected by a shift in the trade relationship. The NZD/JPY currency pair is very volatile. Profits can get made by predicting the correct movement of the market.
There are so many factors that affect the exchange rate of the NZD/JPY. These factors are very regular in the two countries. Some of these factors, like the central bank’s interest rate, get imposed by the central bank. The NZD/JPY is a compelling pair. It offers a level of inflexibility against the major pairs.
Best Strategies for Trading NZD/JPY
When trading the NZD/JPY as with any other currency pair, there are different strategies that can help you trade profitably. However, it is essential as a trader that you bear in mind that the forex market is quite volatile and trading results can either be a profit or a loss.
That said, to successfully trad the NZD/JPY pair, here are some key strategies you can apply.
Scalping
In forex trading, scalping bascially is day trading strategy which a number of forex traders use. It involves selling or buying a currency pair and holding for just a short timeframe in an effort to make a string of quick profits ranging from 5 to 20 pips on a trade.
With scalping, the objective is to capture small profits rather than holding long for bigger gains. In some cases, traders can also increase the size of their lot to potentially expand their gains.
NZD/JPY has tendencies of making strong and fast movements which can last much longer than regular scalping timelag. As a result, it is an ideal pair option for scalping although is doesnt’t have the tightest spread.
Since the idea behind scalping is to enter and exit trades within a short timeframe, you need to ensure that as a trader, you have a strong strategy for your entry and exiting. For instance, you can decide to trade a trend that is long-term, however, exiting your trading position when the movement’s momentum decreases and then start looking for a new opportunity.
Trend Trading
Trend trading is a strategy in forex trading that seeks to make profits from analyzing the momentum of an asset in a certain direction. When price moves generally in one direction like down or up, this is referred to as a trend.
In this strategy, traders assume that an asset will keep moving in a particular direction as the current trend is. The trend trading strategies most times contains a stop-loss or take-profit provision. This will help to lock profit in and protect traders from having great losses if there is an unexpected reverse trend.
This method is used by both short-term, long-term, and intermediate traders.
In relation to NZD/JPY, this currency pair also has strong trends, just as they have strong ranges. You can trade NZD/JPY using upward movement or downward movement. Basically, your strategy is to take advantage of upward trend movement where prices seem to form new highs or downward trend movement where prices tend to form new lows.
When trading NZD/JPY using the trend trading strategy, it is advisable to use price action and different technical tools to ascertain the direction of the trend and when there may be a shift. This is a common technique among professional traders.
You can get into long positions when the currency pair NZD/JPY is in an uptrend and enter short positions once the pair moves downwards. It is important to note that the Japanese asset executives also make related investment decisions. This results in a highly correlated position that can create trends.
Swing Trading
For swing trading, the trader’s strategy is to get hold of a series of short profits or medium profits in the foreign exchange market. This could be for a couple of days, or it could even run into weeks. Primarily, swing traders make use of technical analysis to locate trading opportunities.
Swing traders are exposed to the risk of overnight trades as well as weekend trading risks. As a swing trader trading the NZD/JPY, you can make profits using a recognized risk or reward ratio fixed on a profit target and stop-loss. You can also take losses or profits based on movements in price action or technical indicators.
The currency pair, NZD/JPY, are inclined to have quite strong ranges which can be sustained longer than a year. As a result of this, traders can make use of them in setting the support and resistance levels, then go ahead to buy at the support level and sell at the resistance position.
History has it that NZD/JPY has previously had many movements that run between a particular number of pips. Having a good knowledge of this range of movements can help traders easily forecast future movements in prices.
It is equally important to note that industrial companies in Japan place their orders at rounded figures like 101.00 or 95.50. Potentially, these round figures function as a short-term resistance and support levels. It is advisable to look out for them.
Regardless of the trading strategy, you use in trading the NZD/JPY; there will always be risks. This is mostly due to the volatility of the currency pair itself. However, where there is a big price movement, this is also an opportunity to capture larger gains.
Will NZD/JPY Fall?
The price action of the NZD/JPY has been forming a bull flag. This was following a sharp rise in October 2021.
The price had drifted between 76.00 to 79.00 within the last months of 2021. A slight shift in price has made the currency pair drift back to the 1.0 Fibonacci retracement of 80.182 in November.
The NZD/JPY got believed to have reached its greatest level in November 2021.
There was a high expectation of a very high hawkish reserve bank of New Zealand in 2022.
This happened during November and the first quarter of December 2021. And this expectation was an obstacle to the NZD
The current NZD/JPY exchange rate is 85.108, which is not expected to fall anytime soon. Instead, it should rise to 87.697 this year.
It has a predicted potential profit of +3.04%. It is also expected that in five years, the NZD/JPY exchange rate potential will be 98.594.
When to Trade NZD/JPY
Trading NZD/JPY is relatively straightforward, although there are some challenges.
Liquidity can be a problem, and traders find it challenging to place trades when they want to. The issue of liquidity arises because NZD/JPY is a minor pair.
This problem can be avoided by trading when the market is busy and at its peak. That is when NZD and JPY are always available.
The NZD/JPY can be very volatile because of the various predictions of NZD by traders and investors. Policymakers have tried acting against the different predictions to no avail.
The JPY is also hardly affected by the market volatility. And this makes them a good currency pair for trading.
The “buy” call for the NZD/JPY is best placed when the JPY market gets expected to fall. And the NZD market gets expected to rise.
The “sell” call for the NZD/JPY gets placed when the JPY market gets expected to rise and the NZD fall.
Profits can also get made from the rise or fall of the NZD/JPY market. If the market prediction goes contrary to a trade, a loss will also get made.
Traders should have an exit strategy ready in case of a sudden shift in the market. This is essential by setting a stop loss margin on each trade. The stop loss closes a trade when it gets to a particular limit and fixed time frame.
The size of the cost percentage of a trade corresponds with the cost of that trade. That is, the higher the percentage, the higher the cost.
The cost of NZD/JPY is very high when the market volatility is low. When the price of NZD/JPY is low, the market volatility will become high. It is not advised to trade when the market volatility is high.
It is not also advised to trade when the market costs are high. Trading at an average value of volatility provides reasonable prices.
When NZD/JPY gets traded using limits, the trading cost will get reduced. This brings the slippage to zero. It also reduces the trade cost.
Factors that Influence the NZD/JPY Trade Markets
Due to the high volatility of the market, correlations can change.
The New Zealand commodity export price influences the price of NZD. These commodities include the cost of meat, milk, or wool.
The price change of some commodities can also influence the NZD/JPY; this is because of Japan’s manufacturing sector. Some of these commodities are steel, coal, and aluminum.
Some critical economic occurrences in China can influence the yen. The yen can be affected by financial news and changes, like changes in data inflation, interest rates, and unemployment rates. It can also get influenced by trade data balance.
Important announcements made by the Reserve Bank of New Zealand or the Bank of Japan can also influence the yen. This, in turn, causes the NZD/JPY to experience high volatility. This is because of the trade index and price index. This can also be a result of interest rate decisions of their Reserve Banks.
Some of the benefits gotten from trading NZD/JPY are:
- It is an excellent way to learn about the Asian currency market.
- The potential gain obtained from trading this currency pair may be high due to the High volatility.
- They are not affected by the economic reports of the EU or the US. This makes them an ideal currency pair for trading.
- They are easier to analyze than most major pairs.
The Trading Hours of NZD/JPY
Understanding when to buy or sell NZD/JPY requires knowledge of the trading hours. That is knowing the best time to place a trade.
NZD/JPY and minor pairs that have a high liquidity ratio. The best time to trade the NZD/JPY is at the start of the market. That is when the two currency trades are more available.
The NZD/JPY gets traded 24/7 and 5 days a week. The trading hours of the NZD/JPY from Mondays to Thursdays are from 00:00 to 23:00 CE. They are also traded from 23:15 to 24:00 CET.
They get traded in the local market from Mondays to Thursdays from 00:00 to 23:00 CET and from 23:15 to 24:00 CET.
The NZD/USD gets traded on Fridays from 00:00 to 22:00 CET. They get traded on the local market on Fridays from 00:00 to 22:00 CET.
In Tokyo, the trades start at 9:27 p.m. local time. The trade lasts for 59 hours and 33 minutes.
In Sydney, trade starts at 8:10 p.m. local time. The trade lasts for 61 hours and 40 minutes.
In London, trade starts at 1:27 p.m. local time. It lasts for 61 hours and 40 minutes.
In New York, trade starts at 8:28 p.m. local time. The trade lasts for 1 hour and 2 minutes.
The Wellington and Tokyo market opens at 10 p.m. and closes at 6 p.m. GMT for traders in the United Kingdom.
The trade market gets closed on the weekends and only resumes on Mondays. Only special trading sessions get done on the weekends.
Although traders get permitted to watch the market during the weekends. This allows them to develop new strategies to place trades when the market resumes on Mondays.
The Trading Session of the NZD/JPY
One unique feature of the forex market is its 24/7 trading session. This 24/7 trading offers many advantages to traders. Traders get opportunities to trade despite the liquidity ratio of the currency pair.
This permits traders anywhere in the world to trade at any time. Traders can trade during regular work hours, after work hours, and night.
Although trades can get placed at any time, some trades get executed based on specific hours. Some market prices are volatile at different time frames. Other trades may get muted at particular time frames.
Different currency pairs get traded at different intervals. This may be due to the actions of traders online at that time. The forex markets have three trading sessions.
The Asian, North American, and European sessions. They can also get referred to as The New York, London, and Tokyo sessions. These countries represent the main financial points for each region. The forex market is active when these countries conduct trades.
The NZD/JPY is under the Asian or Tokyo trading session.
The Asian or Tokyo Trading Sessions
The Asian trading session is usually the first market to see trade actions. They are the first session to start the week, usually with high liquidity.
Economic activities in Asia are usually represented in the Tokyo financial market. This lasts from midnight to 6 a.m. GMT.
There are different countries under this session. They are China, Australia, New Zealand, and Russia. It is important to note that these markets are very scattered.
They are more stretched beyond the regular Asian hours. The Asian trade session hours usually run from 11 p.m. to 8 a.m. GMT. This accounts for trades on these markets.
How to Calculate the NZD/JPY Pips
The pip is an acronym for “point in the exchange .”It measures the movement of exchange rates between two different currencies.
One pip represents a movement made in four decimal places for most currency pairs. That is 0.0001 or 1/100 of 1%. For currencies paired with the JPY, one pip represents only two decimal places. That is, the pip is the second digit after the decimal point. The use of the pip to measure price movement is necessary. It prevents massive losses. If one pip were 10 points, it would have significant volatility in the value of a currency.
The Regulated Trading Platforms for the NZD/JPY
The first step in trading currency pairs is to choose a regulated and licensed broker. Especially when trading pairs like the NZD/JPY.
A good and licensed broker will provide credible information. This information will help traders to make good trades. They also provide traders with direct access to the market. This enables traders to buy and sell at their convenience.
Credible brokers own licenses from authorized regulatory agencies. This ensures the safety of an investor’s capital. Investors should do research and get reviews before investing with any broker.
Some credible and regulated brokers trade NZD/JPY on their platforms.
Capital.com
Capital.com is a well-known brokerage firm founded in 2016, they have their offices in Minsk, London, Limassol and Gibraltar. They are also hight regulated by bodies such as the Financial Conduct Authority (FCA) in the United Kingdom, Cyprus Security and Exchange Commission (CySEC), Australian Securities and investments Commission located in Australia (ASIC) as well as the National Bank of the Rebulic of Belaru in Belarus.
Anyone that has been in the forex trading space for a while would be used to this name by now. Capital.com is one of the most popular brokers out there and also one of the top brokerage firms. They function just as any other brokerage firm would online, providing a marketplace where forex traders can buy and sell currency pairs.
Capital.com is also a good platform for beginner traders in the forex market. This is because they provide an easy-to-use interface for their traders. When starting out in forex trading. It is best to work with a brokerage firm that has a simple interface to avoid navigation challenges.
They also have an active customer support system that is available to answer as many trading-related questions in real-time. This is also a good option for beginner traders rather than choosing much larger institutions that make you wait long minutes before attending to a simple question. Traders who choose Capital.com also have the zero-fee advantage and have offer NZD/JPY among their currency pairs.
Some of the downsides of choosing Capital.com as your preferred broker is that MetaTrader 5 is unavailable to forex traders using this broker. Also, outside the United Kingdom and Australia, Capital.com has no additional license in the tier-1 jurisdictions.
Vantage Market
Vantage market is equally a top broker located in Australia, and they were formerly known as Vantage FX. The company was founded in 2009 with the brand name MXT Global. However, in 2015, they rebranded and became Vantage Market.
Although from the start, the Vantage market site was designed to serve the Australian audience, over time, they have grown and consequently adjusted to accommodate globally. They are regulated by the Australian Securities and investments Commission located in Australia (ASIC), Financial Conduct Authority (FCA) in the United Kingdom, and the Cayman Islands Monetary Authority (CIMA) located in Cayman Islands.
Vantage markets is a leading broker in Australia, and they provide a wide range of forex trading services that allow clients to access the international foreign exchange market. They also have a top-notch customer service system that is always available to attend to traders’ questions and requests.
They are also committed to ensuring that trades are executed very fast. The Vantage market platform mostly uses the MetaTrader software. Traders are given access to the MetaTrader 4, the MetaTrader 5 Webtrader, and the Markettrader.
Some applications are available for traders who prefer to trade using their mobile devices when you choose Vantage Market as your broker. These apps include Zulu trading, MAM/PAMM, and MyFXBook Autotrade. These mobile apps are made available on all platforms. They emphasize robot trading; here, trades are placed automatically using preset parameters.
The new MetaTrader 5 platform provides a range of automated trading tools which have become quite popular. The MetaTrader community also provides various add-ons.
Conclusion
It is necessary to have full knowledge of currency pairs. This enables traders to know the high risk involved.
Basically, trading any financial instrument including currencies come with very high risk. Investments can get lost on a single trade because of a wrong prediction. Although the NZD/JPY is a volatile currency pair, a number of professional traders regard the yen as a currency that is safe. This is because even at times when there are economic uncertainties, you will find that the Japanese yen is rather strengthened.
The two currencies have high success rates in the global financial market. It is also necessary for traders to know how to check the currency pair correlations. Traders should also know the number of pips of each currency pair.
Trades are placed based on the prediction of buying or selling a currency pair. If the trade goes in favor of the prediction, profits get made. If the trade goes contrary to the prediction, a loss gets incurred. A trader can lose his entire capital in the event of a loss.
Traders should be able to set a stop loss and take profit margin. This closes a trade when it gets to a particular limit. It helps reduce the potential loss incurred in a wrong trade prediction.
Trading on currency pairs gets done 24/7 and 5 days a week. Trading gets carried out from Mondays to Fridays at specific time intervals. The NZD/JPY is traded under the Tokyo session, which runs from 11 p.m. to 8 a.m. GMT and is stretched beyond the Asian trade hours. They are also the first session to resume trade on Mondays.
The NZD/JPY is traded at different hours or time zones, depending on the country or region. It is necessary for traders to know the various trading hours. This helps ensure they trade at the best time. The best time to trade NZD/JPY is at the start of the market when the currency pair is available, and the price rate is low.
Profits can get made from a correct trade prediction. They have some factors that influence the NZD/JPY currency pairs. Most of these factors get imposed by the Reserve Banks, like the high-interest rates.
Although the NZD/JPY market has been unstable recently, predictions show a high increase in the coming months.
Trading the NZD/JPY is very easy, but some challenges are undoubtedly present. One of these challenges is the liquidity ratio which arises because NZD/JPY is one of the minor currency pairs.
There are different time intervals for placing various trades, especially the minor currency pairs. These currency pairs are best placed at the start of the market when the price volatility is very high.
There are also different trade sessions for other currency pairs. The three trade sessions are the Tokyo, London, and New York trading sessions.
The NZD/JPY falls under the Tokyo sessions. The Tokyo session is usually the first to start the market. The market under these sessions gets scattered. They get stretched beyond the Tokyo hours. The Tokyo session trades 24/7 and 5 days a week. This permits traders to trade anytime. Trades can get conducted during regular working hours. They can also be conducted after work hours and throughout the night from Mondays to Fridays.
A trader needs to invest and trade on the forex market using a regulated and licensed broker. Regulated brokers get monitored and supervised by regulatory agencies. This helps protect traders or investors, especially from trade manipulations, loss of funds, and illicit trading activities.
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