The US Election countdown – don’t just brace for volatility. Trade it
If 2020 hasn’t been turbulent enough already, the US election is well and truly underway. As the future of the country’s leadership remains uncertain, financial markets are braced for further volatility.
The “strength of the U.S. dollar” is a popular topic within the campaign messaging of both candidates this year. Ultimately, that strength is based upon the economic health of the nation as a whole. Promises of job creation, national debt reduction and investment are often cited as ways of achieving a strong dollar.
From a trading and investing viewpoint, however, the effects of the election will be far wider. The impact is not limited to the dollar – the equities, futures and FX markets are all affected by the relative strength of the United States dollar as well as political and economic stability.
For example, the announcement by President Trump in early October that he was ceasing stimulus negotiations caught the market by surprise. This was a turnaround from 72-hours earlier when the President, via Twitter and in hospital, called for negotiators to “work together” to find an optimum solution.
Whatever the outcome, the message for traders is clear: brace yourselves for volatility between now and the November 3rd election.
Prepare for volatility
The basic rule of thumb is that long-term traders and investors will not appreciate the looming uncertainty. With sudden and drastic spikes and drops expected, traders must be ready to react quickly to any poll numbers, debates or tweets that may have an effect on the markets.
As volatility seems to be far off waning, market participants should be looking at how to take advantage of volatility itself – whether this is to protect or hedge their portfolios or seek profit opportunities from the market movements. With FXCM’s VOLX CFD you can track the future volatility of the markets rather than the stock prices themselves.
VOLX provides investors with a further means to potentially profit directly from the unprecedented election without having to speculate on which direction the market is heading.
VOLX has proven itself as an effective way to diversify portfolios and manage risk – making it the ideal trading instrument for investors to use as a tool to navigate in the build-up and fallout from November 3rd. With a minimum contract at 1/100th of the standard VIX Futures size, traders are given an affordable way to control exposure and trade with precision on an underlying instrument that has soared in popularity recently.
To find out more, visit: https://www.fxcm.com/uk/
Disclaimer:
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage.
75.38%of retail investor accounts lose money when trading CFDs with this provider.
You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
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