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. Because of its huge rate of economic growth, a country is a great place for FX trading.

If you are one of the beginners on the market, something that you might not know is that Japan represents one of the leading Forex countries around the world. The country represents the financial center of the region, alongside Hong Kong and Singapore.

Here, FX trading is very popular. There are tens of thousands of people who are investing in the Forex trading market in Japan, and the number of them is increasing every day. If you are just starting out in the market, you might be having a lot of questions and it might be a little hard for you to understand where and how to start trading Forex.

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 and discover every little detail that might be important for Forex traders in the country.

How to find the best Forex brokers in Japan?

Finding a trustworthy and safe Forex broker can be a huge challenge. This is especially true if you are a beginner and don’t really know what it is that you are looking for in this market. Forex trading is a very risky market, and if you want to stay safe, you have to make sure that you are using only trustworthy, safe, secure, and reputable Forex brokers.

To make your job easier, we did research in hopes of finding the best Forex brokers that guarantee the safety and security of you and your hard-earned money. Below, you can see the list that we were able to come up with. Do not hesitate to take a look at these Forex brokers and start trading today!

XM Group

XM Group Forex Review

Minimum deposit

5 USD

Licences

CySEC, IFSC, ASIC

Maximum leverage

1:30*

US Clients

No

Exness

An in-depth review of Exness Forex broker

Minimum deposit

1 USD

Licences

CySEC, FCA, FSA

Maximum leverage

1:Unlimited

US Clients

No

IQ Option

IQ Option Review – can the broker be trusted?

Minimum deposit

10 USD

Licences

CySEC

Maximum leverage

1:1000

US Clients

No

BlackBull Markets

BlackBull Markets Review – What Does This FX Broker Offer?

Minimum deposit

$200

Licences

FMA

Maximum leverage

1:500

US Clients

No

Forex.com

Forex.com Review

Minimum deposit

100 currency units

Licences

CIMA, FCA, NFA

Maximum leverage

1:200

US Clients

Yes

EagleFX

EagleFX Review – Is it worth your time and money?

Minimum deposit

10 USD

Licences

N/A

Maximum leverage

1:500

US Clients

No

RoboForex

RoboForex Broker

Minimum deposit

100 USD

Licences

CySEC

Maximum leverage

1:200

US Clients

No

Forex trading regulations in Japan

While investing in this market, one thing that can guarantee your safety is to trade with regulated Forex brokers. One of the main reasons why Forex trading is so popular and successful inJapan is the fact that the leadership of the country really does care about the economic environment in the country. Every single country around the world that is trying to become a leading place in Forex trading is doing its best to work on the regulatory framework that they have, and Japan is not an exception either.

The financial market in the country is mainly regulated by the Japanese Financial Services Agency, better known simply as JFSA. The regulatory body also takes care of the Forex trading market. JFSA is responsible to oversee the Forex trading market and make sure that everything there happens according to the local law, making sure that traders are kept safe.

JFSA is known to have a very strict approach when it comes to Forex trading, which is one of the major reasons why the market is so successful in the country. The regulatory body is responsible to license the Forex brokers that want to own a local license for operation.

However, because JFSA is so strict, getting a license from them is not that easy, local Forex brokers in the country have to satisfy certain standards and requirements that the regulatory body has. This is not all, however – the brokers are required to make sure to always keep a state of trustworthiness. In case there is a broker that has a license and not really follow all of the guidelines, the response from the regulatory body will be very strict.

Requirements of JFSA

As the main regulatory body of the country, JFSA has a very important job, in which, as it turns out, JFSA is very good. The brokers that are licensed by the regulatory body have to do their best to make sure that they are adopting every single requirement.

One of such is that the brokers are required to submit periodic reviews and audits about their operation. This is one of the major tools that JFSA uses to make sure that the brokers are in the right place. In case there is something that is not being done the way it should be, the regulatory body is always ready to take appropriate actions. This includes warnings, fines, and even taking away the license.

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. There also are limitations in the country regarding the leverage as well.

In general, leverage is something that can be very helpful, 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, which is very reasonable. 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.

Although for some traders the limitations that the local regulatory body of the country has might sound a little too much, it should always be kept in mind that the regulatory body does so to make sure that the Forex trading market in Japan is safe for every investor in the country.

The national currency of Japan

The national currency of the country is the Japanese Yen, which represents one of the most important currencies in the world of Forex trading. The Japanese Yen 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.

It is a fact that the domestic debt of the country is very high, however, one thing that not many investors know is the fact that many times, Yen is considered to be a safe-haven asset. One of the major reasons for it is the fact that when there is some type of crisis around the world, the Yen, much like the USD, stands steadily, and even more than that, has a tendency of going up.

In the world of the Forex trading market, only seven of them account for 83% of all Forex market, and Yen is one of them. This is why it is considered to be such an important currency pair in the world of Forex trading. Yen is one of the largest currencies in terms of international trade and Forex trading, and the Bank of Japan is the one that is responsible for its condition.

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.

What payment methods can Japanese traders use?

While trading Forex, something that you will have to focus on a lot is the payment methods. While investing in this market, you have to use the payment methods that work best for you, while also paying as little money as possible on fees and commissions. 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 of the country.

Local payment methods

There is a very intreating 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.

As of 2019, a huge majority of all payments in Japan were made using credit cards, the data also shows that the usability of mobile payment methods is increasing in the country, the usability of which has increased drastically in the previous years. While choosing the best Forex broker in Japan, you should take your time and see what payment methods are available on the Forex broker.

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.

What can you trade in Japan?

As we have already said in this guide of best FX brokers in Japan, the market is very heavily regulated in the country. Because of this, there are some limitations on what and how you can trade in the country. However, in general, you can trade the major trading assets very easily in Japan.

It should not come as a surprise that the Japanese trading market is dominated by currency trading. This is the case for many other countries as well, as Forex trading represents the biggest market worldwide. As the official data from 2019 shows, the average daily turnover of the Forex trading market was as much as $5.1 trillion, which is a huge number.

As a trader, you will be able to easily tell that the most popular market in Japan is Forex. You can trade most of the major, minor, and exotic currency pairs in the country, which gives investors a huge diversity.

Japanese investors also have the ability to trade commodities with local brokers. Since Japan heavily relies on imports of food, and other goods, for that matter, commodity trading in the country can get very investing. You can also trade stocks in the country, don’t forget that Japan is the home country of the Tokyo Stock Exchange, which is considered to be the biggest stock markets in the region. Around the world, it is the largest stock exchange by aggregate market capitalization of its listed companies.

No bonuses for Japenese traders

We have already mentioned this at the beginning of our guide to 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

Forex trading in Japan – Final thoughts

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. Japan is a place that will not disappoint Forex traders. With its high safety and security standards, Japan offers traders experience like no other.

Being the home of the Tokyo Stocks Exchange, Japan is one of the leading countries in terms of trading services. We believe that Forex traders in Japan will have the privilege of trading Forex, or any other asset, in a very safe, secure, and transparent environment.