Forex trading and parliamentary elections in the UK
Elections of the President or Parliament are one of the main fundamental factors that can have a strong impact on the exchange rate.
It is at this time that a sharp trend reversal or other troubles in the form of price gaps or volatility surges are possible.
At this moment, you can not only make good money by catching the beginning of a new trend, but also lose money if you incorrectly assess the situation.
This is why it is so important to be ready to react in time as the election date approaches.
What should you expect from trading during elections?
Most brokerage companies warn their clients that during the upcoming elections it is possible:
• A sharp increase in volatility with possible trend reversals
• A decrease in the liquidity indicator to a minimum
• An increase in commissions for opening transactions, including the size of the spread
• A high probability of slippage when opening orders
• Gap – price gaps between quotes
• Reduction in the amount of leverage provided
• Other troubles are also possible
After such a warning, you should think carefully about whether it is worth trading during elections or whether it is better to postpone opening new transactions for a while.
This is especially true for the work of automatic advisors , since the market situation becomes unpredictable and may differ radically from that which is included in the algorithm of the advisor.
In addition, brokers take other actions to limit Forex trading, up to completely blocking the opening of new orders.