Trading USD/JPY
The major currency pair, USD/JPY, is widely traded around the world. Owing to its high liquidity and low spreads, the pair is an attractive proposition for both novices and more experienced traders. This review explores the history of the forex pair in addition to the risks and advantages. We also look at how you can start trading USD/JPY with investing tips, strategies, charts and signals.
USD/JPY Trading Brokers
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Trade 48 currency pairs with low spreads from 0.1 pips and leverage up to 1:30 (EU) and 1:500 (Global). Micro lot trading is also available and new currency traders can make near-instant deposits with no fees.
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FXCC offers leading fees compared to alternatives with spreads as low as 0.0 pips and $0 commission. Over 70 currency pairs are also available, providing more opportunities than most competitors.
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Pepperstone offers ultra-low spreads from 0.0 pips on the Razor account and has an excellent selection of 60+ pairs. You can also trade currency indices, which aren't available at many alternatives. Forex lots start at 0.01.
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Trade 85 major, minor and exotic forex pairs via CFDs on IB's FXTrader platform with tight spreads and low commissions, or trade forex on the spot market. They offer more FX assets than almost any competitor.
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XM offers ultra low spreads across a wide range of forex assets with no re-quotes or hidden charges. Forex can be traded 24/5 on desktop, web and mobile. Over 50 currency pairs are available including all majors.
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Trade 50+ major, minor and exotic pairs with an award winning platform. Users get institutional-level prices with spreads from 0.0 pips and low commissions. The VPS will also serve high-volume, active day traders.
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OANDA offers 68 currency pairs, which is above the industry average. You can speculate on majors, minors and exotics, with spreads from 0.8 pips on popular pairs. There are no commissions and leverage is available up to 1:200. Average execution speeds are fast based on tests, at 12 milliseconds.
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IG offers currency trading on its award-winning web platform and mobile app. Comprehensive charts and forex analysis tools are also available through ProRealTime.
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Trade 70+ currency pairs with ultra-fast execution speeds and tight spreads from 0.46 pips on EUR/USD. The range of forex assets outranks many rivals.
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Plus500 offers forex trading via CFDs with tight, floating spreads and an excellent suite of 60+ currency pairs. We got spreads of 0.6 pips on the EUR/USD during testing - lower than many alternatives.
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Markets.com offers major, minor and exotic currency pairs available to trade as contracts for difference (CFDs) or spread betting (UK customers only). Spreads are competitive starting from 0.6 pips on the EUR/USD.
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NinjaTrader supports the trading of popular currencies including the EUR/USD. The trading software also offers unique features tailored to forex trading, including specific order and market windows.
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Axi offers a great selection of 70+ major, minor and exotic currency pairs. There are no restrictions on trading strategies and the broker boasts impressive spreads by connecting to 20 liquidity sources.
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Trade 170+ major, minor and exotic forex pairs with floating spreads and leverage up to 1:30. Forex futures are also available on some currency pairs. However the forex broker has a track record of amending margin requirements without appropriate notice.
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Trade 35 major, minor and exotic forex pairs through CFDs with floating spreads from 0.1 pips. Alternatively, binary options allow you to speculate on rising and falling prices with a fixed stake and payout.
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Focus Option offers 22 forex pairs tradeable via binary options, including a selection of majors and minors. FX pairs are also available to trade with margin on Focus Option's mobile app, which offers high leverage up to 1:50 and spreads from 1 pip.
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Global Prime traders can access 48 forex pairs including majors, minors and exotics with tight spreads from 0.9 with no commission or from 0 with a $7 round turn. Forex is traded via the leading MT4 platform, micro lots are available and latency is low via a New York-based server.
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Vantage offers 55+ currency pairs - above the industry average, so experienced traders can explore plenty of opportunities. Vantage's deep liquidity pool provides forex spreads from 0.0 pips in the ECN account, lower than many alternatives. There are also no commissions, deposit fees or hidden charges.
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Trade currencies with 0.0 pip spreads at one of the world's leading forex brokers. IC Markets is a great choice for serious traders with superior execution and low fees.
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AvaTrade offers 50+ currency pairs with competitive spreads from 0.9 pips and zero commissions. You can trade majors, minors and exotics around the clock on industry-leading platforms, including MT4 and MT5. Traders can also access beginner-friendly trading tools and comprehensive forex education.
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Forex.com is a leading FX broker. The brand offers a wide range of currency pairs and some of the lowest fees in the industry. Spreads on the EUR/USD come in as low as 0.0 with a $7 commission per $100k.
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Go long or short on 50 forex pairs including the EUR/USD and GBP/USD with zero commissions. There are plenty of opportunities to buy and sell currencies via margin or copy trading.
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An impressive selection of 52 currencies are tradeable on eToro's proprietary platform and app. Traders can also continuously hone their forex strategies by switching between demo mode and their live account any time.
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OspreyFX offers more than 50 major, minor and exotic currency pairs. Spreads start from just 0.1 pips on the EUR/USD and the broker provides a suite of forex trading education for beginners, including partnering with Forex Squad.
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CloseOption offers binaries on 25+ forex pairs, including majors like EUR/USD and a few minors like AUD/JPY. Payouts vary by currency, with decent typical payouts of 75% for GBP/USD.
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Trade 70+ major, minor and exotic forex pair CFDs with up to 1:1000 leverage, no commission fees and competitive spreads from 0.8 pips. FX trades can also be executed via the reliable and fast MetaTrader 5 software.
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Errante traders can access 50+ forex pairs with leverage up to 1:500 (location dependant). The broker offers fast execution and tight spreads, especially to clients with VIP and Tailor-Made accounts.
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Kwakol Markets offers a wider range of forex pairs than most competitors, with 90+ assets available. Users get fast execution speeds through the ECN model and competitive spreads. On the negative side, not all currency pairs are available on MT4.
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Trade 70 major, minor and exotic forex pairs with ultra-low ECN spreads and fast execution via the MT4 or MT5 platforms. There are also zero SL/TP limits and automated forex trading is well catered for.
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Ingot Brokers offers forex trading on a modest suite of 30+ currency pairs with spreads starting from zero on raw spread account types. Currencies can be traded 24/5 though exotics are only available on MT5.
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Trade a small selection of 25 major and minor pairs. Spreads from zero on the pro account, micro-lot trading, and very high leverage make up for the limited range of currencies. The MetaTrader software is also a well-regarded platform for forex trading.
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Axofa offers 50+ forex pairs with raw spreads and low commissions. On the downside, the broker is not particularly transparent when it comes to their account conditions and fees.
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Go long or short on over 50 currency pairs with spreads from 0.6 pips on EUR/USD. Traders can access market-leading forex tools in the MT4 platform, including customisable forex charts and algorithmic trading.
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Trade binary options on 25+ forex pairs including a range of majors and minors, as well as precious metals paired with USD. Payouts top 80% and users can analyze market movements on the hugely popular MT4 platform and app.
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World Forex offers CFD and digital contract trading on 53 forex pairs, including EUR/USD and GBP/EUR. High leverage is available for CFDs, which can be accessed with competitive spreads on certain account types.
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FinPros offers 80+ forex pairs, which is one of the more diverse offerings available. Traders benefit from ultra-low latency, MT5 support and very tight spreads and low commissions on the RAW+ account.
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Trade 45+ major, minor and exotic pairs with deep liquidity and low latency. The ultra-tight spreads from 0.01 pips on raw accounts, competitive $7 or lower round-turn commissions and high leverage up to 1:500 will suit scalpers, who can trade without limits.
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IQCent traders can access CFDs or binary options on 40+ forex pairs, including majors, minors and exotics. CFD spreads start from 0.7 pips and binary options payouts are decent up to 95%. Trading takes place through the broker's proprietary platform with advanced analysis tools.
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Trade 50+ forex pairs including popular majors and minors with very high leverage available up to 1:1000. Gold, silver, palladium and platinum pairs with USD are also available.
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Trade 25+ major and minor currency pairs with access to over 30 technical indicators in the broker's proprietary terminal. You can also follow and replicate other forex trades using the integrated copy trader.
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Scope Markets offers MT5 trading for a range of major, minor and exotic currency pairs with high leverage and a low starting deposit. Multilingual 24/5 support is also available to support forex traders.
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Trade 50+ forex pairs, including popular major, minor and exotic pairs. This is a decent selection, but traders will have a choice between the attractive MT4, MT5 or IRESS platforms and regulatory cover from ASIC. The VPS will also suit automated forex trading strategis.
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Trade 49 major, minor and exotic currency pairs with fixed spreads or ECN pricing with no dealing desk intervention and a low starting deposit. You can analyze the currency markets using the broker's in-house trading platform.
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Anzo Capital offers 45+ forex pairs including majors, minors and exotics with fast execution and spreads starting from zero. High leverage up to 1:1000 is available with a margin call at 80% and a stop out level at 50%.
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Rock Global clients can access 50+ currency pairs via CFDs with leverage up to 1:500, world class liquidity and fast execution on the MT4 or TWS platforms. The tight spreads from 0.9 with no commission are a particularly attractive feature.
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VT Markets offers 40+ forex pairs including majors, minors and exotics with lightning-fast execution, up to 1:500 leverage and spreads starting from 0 available to ECN account holders.
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Binary and OTC options can be purchased on over 40 foreign exchange pairs. Typical payouts are also decent at 81% and users can trade forex binary options in just a couple of clicks.
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Exinity offers 150+ forex pairs to trade on a very competitive ECN pricing model, with spreads from zero and low commissions of $4 per round turn. Traders can access the powerful MT4 and MT5 platforms and trade with no restrictions on popular day trading strategies.
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ForexChief supports spot foreign exchange trading on all account types for 40+ major, minor and exotic currency pairs on the leading MT4 and MT5 platforms. Spreads are tight starting from zero and there are no dealers or requotes.
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PU Prime clients can trade 40+ forex pairs via the MT4 and MT5 platforms with dynamic leverage up to 1:500. Spreads start from near zero on Prime accounts, which also charge a $7 commission per lot, and a zero-commission Standard account with wider spreads is also available.
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With 100+ currency pairs including all majors plus many minors and exotics tradeable on the MT4 platform with 1:2000 leverage, SuperForex lives up to its name as a great choice for forex traders. The ForexCopy system is also useful for newer traders.
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AdroFX has a good forex offering of more than 60 pairs, which can be traded with up to 1:500 leverage via the MT4 platform or copy-traded with Allpips. The broker also offers very tight spreads starting from 0.4 pips and charges no commission.
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Start trading on dozens of currencies at RoboMarkets with powerful analysis tools and pattern recognition technology. 35+ currency pairs are available with tight spreads from 0 pips and rapid market execution. You can also utilise the broker's forex news alerts and economic calendar.
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Trade 7 major, 21 minor and 29 exotic forex pairs with high leverage and a choice between STP or ECN accounts. Support is available around the clock and the TradeLocker forex software is provided.
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Core Spreads offers trading on 34 forex pairs through spread betting and 40 currencies through CFDs, with both vehicles covering major and minor pairs. Spread betting spreads start from 0.6 for EUR/GBP; CFD spreads are variable and start from 1.2 pips on EUR/GBP.
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Buy and sell over 50 currencies with zero pip spreads available via deep liquidity pools. M4Markets offers very low latency with execution speeds averaging 30ms. There are no restrictions on forex trading strategies.
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MultiBank FX offers trading on 50+ major, minor and exotic currency pairs. Spreads are tighter than many competitors and the broker offers higher leverage than most alternatives. Automated trading strategies are also permitted.
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Trade Nation offers over 30 of the most popular forex pairs with variable spreads. Traders can access a slick proprietary platform or MetaTrader 4, with real-time forex market updates and insights via 'Smart News'.
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As well as a competitive selection of 55+ forex pairs, traders can access high leverage up to 1:300. You can also enjoy advanced analysis from Trading Central with easy integration into MetaTrader 4.
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Traders can access a decent range of 60+ major, minor and exotic forex pairs through standard and ECN accounts with tight spreads from 0.5 and 0.0, respectively. Execution speeds are also faster than most competitors at 50ms, which will appeal to active forex day traders.
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4xCube offers 60+ currency pairs with competitive trading conditions. We like that all trading strategies are permitted including scalping and hedging.
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ActivTrades is a great broker for active forex traders with industry-low spreads from 0.5 pips and zero commissions. The forex broker also offers impressive execution quality and speeds, alongside award-winning customer service.
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BlackBull offers 64 forex pairs with very competitive pricing through its ECN accounts, with the standard commission-free spread starting from 0.8 and spreads with commission starting from zero. The broker supports diverse trading platforms including MT4 and MT5, and provides leverage up to 1:500.
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LQDFX offers an extensive list of 70+ currency pairs, more than most alternatives. Spreads are ultra-low and high leverage is available on the market-leading MT4 platform.
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Trade over 30 currency pairs with tight spreads from 0 pips. Forex traders have a choice of leading platforms including MT4, MT5 and an in-house web trader. The CopyFX system also lets you mirror experienced currency traders with a $100 minimum investment.
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Swissquote offers trading on a huge range of forex assets, covering 80+ currency pairs. Spreads start from 1.3 pips with the Premium account and there are zero commissions. Micro, mini and standard lot sizes are available plus options contracts on major currencies.
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SimpleFX offers a competitive suite of 60 forex pairs with average spreads of 0.9 pips. The charting features are extensive, with convenient mobile and desktop access for all experience levels.
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Go long or short on over 50 forex pairs from majors to exotics, with spreads as low as 0.1 pips. Traders can analyze the currency markets with market-leading trading software and charts from MetaTrader 4.
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During my tests, I was able to access a very competitive range of 90+ forex pairs with ECN spreads from 0.0 pips and leverage up to 1:500. FX traders can also make use of the Trading Central signals or the broker's daily forex analysis.
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Trade on 45+ majors, minors, crosses and exotics, with competitive pricing, ultra-fast execution and no requotes. Newer traders can access zero-commission trading. Experienced forex traders can operate with no trading restrictions and benefit from an ECN account and a VPS service.
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FXTrading clients can access 70+ forex pairs with high leverage up to 1:500, fast execution averaging 80ms, excellent liquidity and spreads from zero. A good selection of minors and exotics are available as well as all the majors. New users can start trading forex in 4 easy steps.
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Trade 36 forex pairs, including the EUR/USD with spreads from zero pips. FXChoice offers higher leverage on forex than most competitors, alongside 24/5 support and an accessible $10 starting deposit.
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With over 190 forex spot pairs, EZ Invest outperforms many rivals in terms of access to the currency markets. Users can also choose between desktop software, a webtrader plus a solid mobile app. On the negative side, spreads aren't the tightest on entry accounts.
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Fortrade offers 60+ currency pairs including a good selection of majors, minors and exotics. Trading takes place via MT4 or Fortrade's proprietary, low-latency terminal, and spreads on the USD/GBP pair average a reasonable 2 pips.
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FP Markets is a good option for forex traders, with 70+ pairs covering an excellent range of currencies. Spreads are already tight on standard accounts and start from zero on raw spread accounts, and the broker offers high leverage up to 1:500 and top-tier liquidity.
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IronFX offers 80 currency pairs with an excellent selection of minors and exotics as well as majors. Trading takes place on the MT4 or a proprietary platform with spreads from zero available to ECN accounts. IronFX offers more currency assets than virtually all competitors.
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Trade 80+ major, minor and exotic forex pairs. This is a very competitive range of currency pairs with 50+ exotics to choose from, and traders will benefit from fast execution and support from extra features including a pip calculator. The MetaTrader 4 software was also designed for online forex trading.
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Libertex offers CFD trading on 50+ forex pairs, offering long and short opportunities. Its strength comes in its tight spreads – we were offered 0.2 pips for EUR/USD.
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Trade up to 33 major and minor forex pairs. This is a small range of currency pairs compared to competitors, with no exotics, but traders do benefit from tight spreads, low or no commissions and low latency.
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HYCM offers 40+ forex pairs, with most available to trade on either the MT4 or MT5 platform. The maximum leverage on offer is 1:30 in accordance with regulations, and tight spreads start from 0.2 on the Raw account and from 1.2 on the commission-free Classic account.
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FXOpen clients can trade 50+ forex pairs (28 on micro accounts) with leverage up to 1:30. Fees are competitive with spreads starting from zero with a small commission on ECN accounts, and slightly wider spreads and no commission on STP accounts.
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Trade 45 major, minor and exotic forex pairs. This is an average range, but the broker offers attractive and very competitive tight floating spreads from 0.3. Useful features including a news feed set the broker apart from many rivals and can help plan forex strategies.
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With 300+ forex pairs, Hantec Markets has one of the widest selections on the market. Floating spreads start from 0.2 pips with ultra-fast market execution and access to the leading MT4 platform.
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With 60+ currency pairs available, Dukascopy offers enough majors, minors and exotics to keep most forex traders happy. The broker also offers high leverage up to 1:100 – a good amount to see from a reputable and regulated broker. Currency traders have access to excellent software, including MT4 and JForex.
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Speculate on popular currency pairs with flexible leverage up to 1:500 and zero-pip spreads in the GO Plus account. Commission-free trading is available with micro, mini and standard forex contract sizes.
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With around 190 forex pairs and spot metals, 140 forwards, top-tier liquidity, fast execution and spreads from near zero, Saxo Bank offers exceptional flexibility and value to forex traders. Advanced charting from TradingView is another plus for active forex traders.
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Trade on 60+ forex pairs with no commission and competitively tight spreads from 0.6 on major pairs such as EUR/USD. This is a good selection of forex pairs and excellent pricing for commission-free trading, well below the industry average.
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Trade a wide selection of 80+ currency pairs with spreads from 0.5 pips and industry-favorite platforms. City Index has 40+ years experience in forex trading with liquidity from tier-one banks.
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ThinkMarkets offers 46 forex pairs, including a decent variety of minors and exotics as well the majors. Forex traders also benefit from very tight spreads starting from 0.0 pips for the EUR/USD in the Zero account.
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CMC Markets offers a superb list of 330+ forex pairs with tight spreads and ultra-fast executions. The selection of currencies is significantly wider than rivals.
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FXTM offers 60+ forex pairs plus 6 indices which track a basket of popular currencies. The brand's ECN accounts offers impressive spreads from 0 with low commissions from $0.40 to $2 per lot and commission-free spreads start from 1.5 pips.
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Trade FX pairs with tight spreads & leverage.
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Trade 60+ forex pairs including majors, minors and a selection of exotics and crosspairs with fixed spreads from 1.8 pips or variable spreads from 0.8. FX traders also get advanced trading software in MetaTrader.
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Trade over 90 pairs and keep costs to a minimum, with tight spreads and industry-leading commissions. Currencies can be traded 24/5 with no dealing desk intervention.
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Trade 24 forex pairs via binary options. Such a small range of currency pairs is not that unusual among binary options brokers, and BinaryCent's high payouts up to 95% compensate for the lack of range.
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Access over 40 currency pairs with no commissions and low spreads from 0.78 pips for EUR/USD. Forex can also be traded 24/5 on a choice of reliable platforms.
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Go long or short on a range of major and minor currency pairs with tight spreads. Powerful trading software is available with a choice of instant and pending orders.
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Trade 200 CFD forex pairs with DMA pricing and tight spreads, ultra low latency and high leverage up to 1:1000. The range of forex pairs available and pricing model are among the most attractive in the African market.
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Capital.com offer a long list of forex CFD pairs for trading. All have competitive spreads. The firm also ensures negative balance protection
USD Vs JPY Explained
The USD/JPY represents the exchange rate between the US Dollar and the Japanese Yen. The US Dollar is the base currency in the pair and the Yen, the quote currency. The figure quoted is how many Yen you need to buy a US Dollar. Generally speaking, when the Japanese economy is growing, the Yen rises against the Dollar. The reverse is also true.
The USD/JPY is a high volume, volatile pair. It is responsible for 17.7% of the daily forex turnover at a value of $900 billion. After the USD/EUR, it is the second most traded currency pair in the world.
Whilst the strength of the US Dollar’s position is more widely known, the Japanese Yen also commands a high market value. Since its introduction in 1871, the Yen has flourished. Today, it is Asia’s most liquid currency and the third most traded currency in the world, after the US Dollar and Euro. However, the pair’s relationship has seen significant fluctuations over its recent history, an understanding of which will help traders make more accurate forecasts for the future.
Pros Of Trading USD/JPY
There are several reasons why trading the USD/JPY is popular:
- Volatility – USD/JPY can be a volatile pair with movement fuelled by Asian market forces. High volatility presents an opportunity to generate large profits but it does so at a risk.
- Liquidity – The volume of trades conducted on the USD/JPY pair is vast, owing to the fact that it’s made up of two of the most widely traded currencies in the world. High volume increases its relative safety given that trading tops, signals and charts are widely accessible. Large sums can also be moved in and out of currencies whilst benefitting from narrow spreads.
- Costs – Consistent with other major FX pairs, the USD/JPY sees relatively low bid-ask spreads. With fewer costs transferred to the trader, greater profits can be achieved.
- Resource availability – There is a broad range of information on the currency pair for traders to draw from. Realtime charts, live daily average ranges, exchange rate history graphs and more can be used to help guide strategy and execution. There is also an active online trading community with popular blogs and forums. Discussions cover historical bar charts, monthly forecasts and economic calendars, to breaking market news, profit calculators, trading hours and prices.
- Predictability – The USD/JPY is closely linked to the commodities market in Japan meaning that conducting research and analysis can be relatively straightforward. Global imports and exports are a good indication of market sentiment. The relative predictability of movement means that the pair makes for a suitable option for both experienced traders and beginners.
- Trading vehicles – Given the interest in USD/JPY, there are many trading vehicles available to leverage. From E-mini USD/JPY to futures and options, ETFs and many more, it has never been easier for traders to speculate on the pice of the major FX pair. Whether it be Elliott Wave analysis or daily pivot points, for traders today there are many technical analysis tools at your fingertips.
Risks Of Trading USD/JPY
As with any forex instrument, there are risks to consider before trading USD/JPY:
- Competition – As technology, including trading algorithms, signals and forecasts become increasingly advanced, traders today need to do more than basic market analysis to generate profits. These algorithms generate accurate forecasts using online charts, forward rates and market data. Retaining a competitive edge is becoming increasingly challenging.
- Volatility – Whilst volatility has its benefits, it also carries risk. In volatile markets, winning positions and options can be lost quickly. As a result of the implied volatility, traders should always action tight risk management strategies to mitigate losses.
- Political intervention – The BoJ has been known to intervene in the forex market when movements threaten to undermine the outlook for Japanese economic growth. Traders should keep up to date with developments and expert analysis.
- Economic instability – Economic instability in Asia can have a big impact on the USD JPY. The Yen is particularly affected, more so than its neighbouring currencies, owing to its global accessibility.
- Leverage – Margin trading using high leverage can be an opportunity to capitalise on big returns. However, when trading volatile pairs such as the USD/JPY, it can be all too easy to see big losses.
Whilst trading USD/JPY does have its benefits, it does also carry risk. Traders should ensure they are familiar with any potential risks before investing capital.
Influences On Movement
There are a number of factors that influence the behaviour of USD/JPY:
- Speculation – Market sentiment can heavily influence the USD/JPY exchange rate. If the value of a currency is forecast to rise, investors demand more of the currency to generate profit. The increase in demand increases the value of the currency.
- Economic growth – Widely recognised as the most important marker, economic strength has a substantial influence on the movements of the USD/JPY. When the US economy weakens, the Yen typically rises against the Dollar. Levels of unemployment, inflation and industrial production are all key indicators of economic strength.
- Political intervention – The US and Japanese economies are monitored by The Federal Reserve (Fed) and the Bank of Japan (BoJ) respectively. The BoJ is of particular interest as over the years, they have introduced a number of policies to help bolster the Japanese economy. Traders should ensure that they keep abreast of current Japanese news.
- Natural disasters – Due to its geographical makeup, Japan is susceptible to powerful natural disasters which can have seismic implications on the position of the Yen. Historically, the US has a more stable climate and is less likely to suffer extreme weather disruption.
- Currency growth – The US Dollar grows at a much faster rate than the Yen. Despite periods of high growth, the trend continues downwards against the US Dollar.
- Currency correlation – A currency does not move independently of other currencies. A change in the USD/EUR will, in turn, affect the USD/JPY. This means that traders need to have an awareness of global forex trends and forecasts to remain competitive. An understanding of the correlation between currencies can prove beneficial.
Calculating Correlation
Currency correlations range between -1 and +1, with -1 being a negative correlation and +1, a positive correlation. Pairs that have a positive correlation move in the same direction whilst pairs that have a negative correlation move in opposite directions. This can be seen most clearly when plotted on a 5 or 10-year graph.
For example, the USD/JPY positively correlates to USD/CHF but negatively correlates to EUR/USD. All currencies pairs are linked in some way, including the GBP. The Yen vs the price of gold is also highly correlated. Despite gold not being a traditional currency, it is traded in a similar way. The higher USD/JPY moves, the further gold tends to fall.
By looking at interactive or streaming charts, current price and exchange rate history, traders can get a feel for why forex pairings behave in the way they do. Relationships between currencies can be utilised in an effective trading strategy.
Day Trading Strategy
Trading Hours
Timing is everything when trading currency. Even though forex markets are open 24/7, there are certain windows that offer the most favourable conditions. It is a matter of quality over quantity.
The USD/JPY sees consistent volume throughout the day. But, between the opening time of 12:00 and the closing time of 15:00 GMT, tends to be the best time to trade. Although Tokyo’s market does not open until later, both London and New York are in full swing. It is during this time that the market is most active, spreads are tightest and volume at an all-time high. It is recommended that traders focus their activity during this intraday window.
Preparation
Traders serious about being head and shoulders above others will emphasise the importance of preparation. Whether it is logging historical data on an exchange rate’s history in an excel spreadsheet, pouring over economic calendars or scouring blogs and forums, to fail to prepare is to prepare to fail.
Moving Average Cross & Bounce
USD/JPY is ideal for intraday trading. Spikes can often be seen within minutes of the market’s opening. To capitalise on rich price action movement, many traders opt for a simple moving average cross and bounce strategy. Its popularity in part, is that it is simple to set up and execute. Some opt for 15-minute charts, but most use a 4-hour candlestick chart. The indicators needed include MA(50/200) and BB(20).
Buy entry rules state that BB(MA20) must be above MA(50), the price needs to be above both whilst also testing BB(MA20) as support whilst above MA(50). Choose a bullish confirmation candle from support and enter a buy/long entry.
Sell entry rules state that BB(MA20) should be below MA(50) and the price has to cross below both whilst testing BB(MA20) for resistance whilst remaining below MA(50). Opt for a bearish confirmation candle from resistance and input a short/sell entry.
It is recommended that traders incorporate stop-losses when using this strategy.
USD Vs JPY News
The daily forex news, specifically economic reporting, is an important resource. Traders should ensure they remain up to date with daily news announcements. Whilst useful for all, it’s particularly important for traders that wish to avoid over-reliance on hourly, yearly, 20 or 30-year forecast charts.
Information regarding public sentiment, economic growth and the latest employment rates all inform a trading strategy. Some of the best outlets for daily updates include:
- CNBC
- Reuters
- DailyFX
- Yahoo Finance
- Google Finance
- Discussion forums
Given the BoJ’s tendency to influence the Yen, it is particularly important for traders to have an overview of daily forex outlooks. Announcements can explain movements in weekly and monthly charts and data in addition to the latest and historical forecasts.
Risk
When day trading on the USD/JPY, traders should aim for strong risk-reward ratios. A ratio of 1:4 is one suggestion and will help balance volatility with profit. For example, risking only 25 pips in return for 100 pip profit. Implementing the 1% rule is always good practice and this pair is no exception. By never trading more than 1% of your total portfolio on a single trade, you will help to curb losses and facilitate long-term investing success.
Whether your trading strategy focuses on key support and resistance levels or moving averages, tight risk management underpins every successful trading strategy.
USD Vs JPY Forecasts For 2023
Now, what does it all mean for the future of USD/JPY? For any broker or trader, short and long-term forecasts, outlook predictions and the latest daily news are valuable resources to guide investment decisions. Today, remaining abreast of forex news, rates and economic reports is more important than ever to gauge future movement and to spot opportunity.
Final Word On USD/JPY
In short, trading on the USD/JPY is a potentially lucrative investing option for UK traders. Low spreads paired with high volume and volatility means profit potential. However, traders should ensure they are informed about the associated risks. As always, it’s our recommendation that a careful approach to risk management should be incorporated into any trading strategy. Whether you’ve been trading on the USD/JPY for years or began trading this week, last week or yesterday even, the fundamentals remain equally important.
Find out more about forex trading.
FAQ
How Do I Trade USD/JPY?
To trade USD/JPY, traders will need to open an account with a forex broker that offers the currency pair. Setting up an account is relatively straightforward. Once sign up is complete you just need to deposit funds and then you can begin buying and selling currency.
What Is A Good Day Trading USD/JPY Strategy?
Risk management should form the basis of any investing strategy. From there, traders may choose to try breakout strategies or leverage moving averages using technical analysis. Risk appetite, expectations, personal targets and the size of investments will also play a role.
What Does It Mean To Trade USD/JPY?
Trading the USD/JPY is to buy and sell the currency pair. There are times when this will be more and less profitable. To generate the greatest profits investors typically trade during high volume periods when spreads are at their narrowest.
Can I Use A Scalping Strategy To Trade USD/JPY?
It will depend on the broker. Before setting up an account, contact their customer support team to see if they permit scalping strategies. With that said, many top FX brokers accept scalping techniques.
When Will USD/JPY Go Up Or Down?
Technical analysis, market data, charts and trends help to form increasingly accurate forecasts and projections. However, there is always an element of the unknown so it is impossible to predict exactly when the Yen will be going up or down vs the Dollar.