US Election: Trading Day Handbook

US Election: Trading Day Handbook, FP Markets

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
  • Wisconsin
  • 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.

3. Timings

  • 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.

 

START TRADING

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

For news, webinars, articles and analysis, visit our dedicated US Elections 2020 Page.

US Elections 2020
Webinar Series

Register and attend

Episode 1

Tue 29th Sep

7:00pm (AEST)

Market History & 1st Debate

View

Episode 2

Tue 13th Oct

7:00pm (AEST)

Electoral College and Swing States

View

Episode 3

Tue 20th Oct

7:00pm (AEST)

Trading Election Day and Post-Election

View

Episode 4

Mon 2nd Nov

7:00pm (AEST)

Election Day Trading Plan

View

Episode 5

Wed 11th Nov

7:00pm (AEST)

Election Results & Future Impact

Register

 

Disclaimer: The information contained in this material is intended for general advice only. It does not take into account your investment objectives, financial situation or particular needs. FP Markets has made every effort to ensure the accuracy of the information as at the date of publication. FP Markets does not give any warranty or representation as to the material. Examples included in this material are for illustrative purposes only. To the extent permitted by law, FP Markets and its employees shall not be liable for any loss or damage arising in any way (including by way of negligence) from or in connection with any information provided in or omitted from this material. Features of the FP Markets products including applicable fees and charges are outlined in the Product Disclosure Statements available from FP Markets website, www.fpmarkets.com and should be considered before deciding to deal in those products. Derivatives can be risky; losses can exceed your initial payment. FP Markets recommends that you seek independent advice. First Prudential Markets Pty Ltd trading as FP Markets ABN 16 112 600 281, Australian Financial Services License Number 286354.

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