Election Day Trading Tips
FP Markets analyst Evan Lucas gives us his top 5 trading tips for election day. What to watch, where to do so, and the critical times in what shapes as a roller coaster ride like no other.
1. Watch what matters not the headlines – Purple Haze
- Florida – No Republican President since 1924 has won without Florida
- Pennsylvania – 20 Colleague Votes, winner could take it all
- Michigan – Rust Belt
- North Carolina – the toss up state
Biggest State here is Florida. If Trump losses Florida he won’t have enough College Votes to pass 270.
2. Watch the Bookie Sites
- Oddschecker, Betfair and others. Watch for sharp change in odds.
- Look for reported volumes – i.e. % of Bets placed.
- In the past we have seen them go offline and then go up with the market completely flipped.
In 2016, Bookie odds changed at 10:50am AEDT from Clinton to Trump. This was the largest market impact of the Election Day.
- Know when Purple states are due to declare, consider your open positions if the live counting suggests vote could be closer than expected.
- Understand processing times and if states allow votes to arrive post-election day like Pennsylvania and North Carolina.
- Mail-In and early voting. Over 55% of the total 2016 vote will be reached prior to Election day. It is likely to be a record turn out and could push back ‘Time Called’.
USD reactions in 2016 were strongest around Florida, Texas and Pennsylvania declarations.
4. Recount/Contested Election
- Close races in purple states can lead to recounts. Be aware candidates can petition for a recount. Key example Florida in 2000.
- Case scenario: 270 Electoral College not met because of 1 or 2 States, and in this scenario results in these States are close enough to be contested. (Again, this was the case in 2000)
- If the election becomes contested the Supreme Court of the United States (SCOTUS) could become involved. The Republican appointed Justices currently hold a 6-3 majority after the appointment of Justice Amy Coney-Barrett.
Volatility will be the biggest winner under this ‘Risk’.
5. Don’t forget the Senate
- Senate Race is as, if not, more important than the White House race for FX as the make-up will determine the passing of legislation.
- Senate Republicans are starting to show signs of blocking big fiscal spends. If Biden wins the Oval Office but the Republicans hold the Senate – could be a very risky setup for fiscal stimulus.
- 35 Senate seats up for election, 12 Democrats, 23 Republicans. Polls suggest a very tight race and that there is a high chance of the Republicans holding the Senate.
This could be the biggest volatility event of the Election Day
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