Lessons from the Darkside ยท Lesson 5
The Tokyo window. The two to three hours after the Tokyo Stock Exchange opens at 9:00 am Japan time, which is 8:00 pm Eastern during US daylight saving time and 7:00 pm Eastern in winter. The first wave of real overnight participation, and the window where I do most of my trading.
Tokyo opens at 8 pm Eastern, which for most of America is dishes, homework and the opening credits of something on Netflix. For me it is the best hour of the trading day, and most of my trades happen in it.
If I could trade only one window of the night, it would be this one. My own journal data says the hour after Tokyo opens has been my most productive hour of the day. Not the RTH open. This one.
What happens
For the first two hours after the 6 pm reopen the market is mostly US participants tidying up, and it builds the Globex initial balance. Then Tokyo opens and the character changes: the first real volume arrives, the Nikkei starts moving, the yen moves with it, and the index futures start testing the levels they built in the first two hours. Hong Kong and Shanghai arrive about ninety minutes later and either confirm the direction or fade it.
Why it suits planned trades
- The levels are already there. By the time Tokyo opens you have the settlement, the Globex IB high and low, the RTH value area and the overnight VWAP. Tokyo tests them. You are not guessing where the trade is; you are waiting for price to arrive.
- First touches. The first time price touches a level that formed earlier in the night is the cleanest reaction you will usually get. The Tokyo wave is what produces those first touches.
- Enough volume to trust, not enough to steamroll. Breaks that hold on Tokyo volume mean something. Breaks at midnight do not.
How I trade it
- The levels are marked before 6 pm. Nothing is drawn in the heat of the window.
- I wait for a first touch of a fresh level, or a spike wick into one, with Bookmap, TickStrike and Financial Juice on screen to tell me when to stand down.
- One or two contracts. Stop behind the next structural barrier, not a round number of ticks. Scale out at the first logical target.
- Five to ten trades a night is normal. Many Tokyo windows give me two or three and that is a good night.
The thunder part
The window earns its name on data nights. Japanese and Australian economic releases, Bank of Japan headlines and yen intervention talk all land in or around this window, and a thin pre-Tokyo book can move several levels in a minute. Know the Asian calendar before the session. If a release lands in the window, resting orders come out until it has printed and the first reaction is over.
Lesson 6 covers the other great window of the night, the one I mostly sleep through: the London open.
Key takeaways
- Tokyo opens at 8 pm ET in summer and 7 pm ET in winter and brings the first real overnight volume.
- By then the levels of the night are already marked, so the window suits planned trades at first touches.
- Breaks on Tokyo volume mean something; the same move at midnight does not.
- Check the Asian economic calendar. Pull resting orders ahead of releases in the window.
Questions people ask
What time does Tokyo open for US futures traders?
9:00 am Japan time, which is 8:00 pm Eastern during US daylight saving time and 7:00 pm Eastern in winter. Japan does not observe daylight saving, so the Eastern time shifts twice a year.
Why is the Tokyo open a good time to trade ES and NQ?
The levels of the night are already in place from the first two hours, and the Tokyo wave is the first real volume to test them. First touches of fresh levels and spike wicks into them are the two cleanest reactions the night session gives, and this is the window that produces them.
Is the Tokyo window risky?
Around Japanese and Australian data and Bank of Japan headlines it can move fast against a thin book. Know the calendar, pull resting orders before a release, and keep size small.
Next lesson: The London Open.
Photo: Jezael Melgoza on Unsplash.
Trade the session your life actually allows.
The night session is a complete market. Learn how it moves, watch me trade it live, read the write-up the next morning, and if you want people who trade the same hours, there is a room for that.
Disclosure. Midnight Futures is an educational site written by Scott West, a private trader. Nothing here is financial advice, and trading futures carries a substantial risk of loss. Some links to the tools and prop firms I use are affiliate links: if you buy through them I may earn a commission at no extra cost to you. Full disclosure · Risk disclaimer