Forex trading in Japan – Here is everything you should know

Located in East Asia, Japan is known to be one of the largest financial centers around the world. With its very successful economy, the country is working tirelessly to address the issues that they have and develop a successful, safe, and secure Forex trading market.

The country represents the financial center of the region, alongside Hong Kong and Singapore. Japanese trading session (Tokyo session) is one of the four major trading sessions in the world of Forex (along with London session, New York session, and Sydney).

Today, we are going to talk about everything that you have to know before you start Forex trading in Japan. So, follow our very detailed guide as we dive deep into the Forex trading market of the country.

List of the best Forex brokers in Japan

Finding a trustworthy Forex broker can be a huge challenge. This is especially true if you are a beginner and don’t know what to look for. Traders need to take into consideration various features of their broker, such as: fees, platforms, customer support, account types and tradable instruments. The huge number of brokers in the market make the selection process even more difficult. To aid you in this process, we created the top list.

Forex trading regulations in Japan

One of the main reasons why Forex trading is so popular and successful in Japan is the fact that the leadership of the country really does care about creating an investor-freindly environment. The financial market in the country is regulated by the Japanese Financial Services Agency, better known as simply JFSA. JFSA is responsible for overseeing the Forex trading market and making sure that regulations are being followed.

JFSA is known to have a very strict approach when it comes to licensing brokers, which is one of the major reasons why the market is so safe for traders. However, because JFSA is so strict, getting a license from them is not that easy, and consequently, there are limited number of local brokers in the market. However, it should be mentioned that residents of Japan can open accounts with international brokers. In fact, many of the brokers in our list are internationally regulated.

Requirements of JFSA

Brokers are required to submit periodic reviews and audits about their operations. This is one of the major tools that JFSA uses to make sure that the rules are followed. Regulations are in place to protect investors and promote fair and transparent conditions.

In Japan, Forex brokers are not able to offer bonuses and promotions. One of the main reasons for it is the fact that in many cases, brokers are using bonuses as a way to get more clients. As a result, many people are opening up to huge risks, which is not good at all.

In general, leverage is something that can be very helpful for experienced traders, however, if it is not used right, it can cause a lot of problems. As of today, the maximum leverage that Forex brokers can offer to their clients is 1:50. All of these requirements are making the local Forex trading market in the country a lot safer, and they actually are very similar to those restrictions that you would come across in other leading financial markets around the world, such as, Europe, for example.

The national currency of Japan

The national currency of the country is the Japanese Yen (JPY), which represents one of the most important currencies in the world of Forex trading. The JPY stands to be the third most commonly traded currencies around the world, right after the USD and EUR. Japan represents the third-largest national economies in terms of nominal GDP, which makes it a very important place for Forex trading.

In Forex, there are seven major currencies, and Yen is one of them. The most traded JPY pair is USD/JPY. High liquidity and high volatility makes this pair attractive for both, short and medium term traders.

The Bank of Japan has the mandate to act in a way to encourage the growth and stability of the national currency. Trading this currency can be a little hard for some, this is why you should always remember to use different types of indicators for maximum safety.

Yen is known to be very widely used as a reserve currency and in this regard, it stands after the US dollar, Euro, and the UK pound sterling. The government of the country has a very strict anti-inflation policy, which has very important consequences on the state of the national currency.

Popular payment methods in Japan

While the payment methods that you will be able to use depend largely on the Forex broker you are using, the major available payment methods are very much the same for most of the Forex brokers in Japan.

Visa and MasterCard stand to be two of the most popular cards in the country, there are also many Forex brokers who accept payments in JCB and American Express as well. Most of the brokers in the market also accept direct bank transfers. JCB is a very famous domestic card brand, which is used by many Forex traders. In total, there are more than 85 million JCB credit cards issued, 15 million of them are outside the country.

In addition, there is a very interesting local payment method, called ‘Konbini’, which is very actively used by Japanese traders. This payment method allows traders to make online payments through bank transfers. PayPal is also a very popular payment method in the country, especially when it comes to funding Forex trading accounts.

It is also very important to look out for the fees and commissions. In most cases, the amount of money that you will have to pay for commissions largely depends on the payment methods that you are using, you can always contact the payment issuer to learn more about the fees and commissions that you might have to pay while making deposits on Japanese Forex trading account.

No bonuses for Japanese traders

We have already mentioned this at the beginning of our guide to the best FX brokers in Japan, because of the local regulations, there are no bonuses or promotions available in the country. Local Forex brokers are restricted by the regulatory body to offer any bonuses to the traders in the country.

While some might think that it is a negative aspect of the Forex trading market in the country, it is not true at all. The thing about bonuses is that, in most cases, Forex brokers are offering them only to attract more investors on their platform.

The regulatory body of Japan decided to let the Forex brokers focus more on the clients that they already have. Instead of spending money and energy on Forex trading bonuses, the brokers in the country are now mostly focused on offering people amazing services, which is a great thing.

Advantages and disadvantages of trading Forex in Japan

Everything has two sides, while it can be very rewarding for traders to invest in this market in the country, there also are some disadvantages as well. The major advantages:

• Very well-regulated market, resulting in high safety and security standards
• Japan has a very successful economy, which makes it a perfect place to trade Forex
• Hundreds of different available trading assets

Here are the major disadvantages:

• Because of strict regulations, the leverage can not be higher than 1:50. While it is not really a disadvantage, it might be something that some traders won’t like
• No bonuses and promotions for traders, however, keep in mind that this is restriction is in place for safety and security reasons

Summary

Japan represents one of the largest economies in the region, which makes it a perfect place for Forex traders who are looking for something new on the market. The Japanese market is strictly regulated, as a result, there are very few local brokers. Which is why, we recommend you to check our list and consider globally regulated brokers.

FAQs on Forex trading in Japan