Forex Trading and the UK General Election

Presidential or parliamentary elections are among the key fundamental factors that can have a significant impact on the exchange rate.

This is when a sharp trend reversal or other unpleasant events, such as price gaps or volatility spikes, are possible.

At this point, you can not only profit by catching the start of a new trend, but also lose money by misjudging the situation.

Therefore, it is crucial to be prepared to react promptly as the election date approaches.

The next elections, which could have a global impact on the forex currency market, will take place in a week: on Thursday, December 12, 2019, the UK Parliament will be elected.

So what should you expect from trading during elections?

Most brokerage companies warn their clients that during the upcoming elections the following is possible:

• A sharp increase in volatility with probable trend reversals
• A reduction in the liquidity indicator to a minimum
• An increase in commissions for opening transactions, including the spread size
• A high probability of slippage when opening orders
• Gap - price gaps between quotes
• A decrease 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 the elections or whether it is better to postpone opening new transactions for some time.

This is especially true for automated advisors , as the market situation becomes unpredictable and can differ radically from the one embedded in the advisor's algorithm.

Furthermore, brokers take other actions to restrict forex trading, including completely blocking new orders.