Political risk is perhaps the most daunting type of risk that traders face, and many may be tempted to ignore it and simply carry on trading. But, by following some simple steps, traders can minimise their exposure to political risk and maximise their chances of profit.
Sterling has lost 5% against gold during the past month as Brexit-related political problems have threatened a constitutional crisis. Amid reports of panic buying in the UK, the price in terms of British pounds has soared.
Italy’s stock exchange contains some of the great names of European industry, from Campari to Ferrari, but is in long-term decline as the country’s government defies the European Commission on its budget deficit while economic growth lags the eurozone as a whole.
Sterling bounced off its lows yesterday as Theresa May mounted a rescue operation after pulling a vote in Parliament on her Brexit deal. The prime minister is meeting European leaders and officials seeking “clarifications” that may satisfy her critics.
The next recession is, we are told, overdue after years of strong growth. How will this affect financial markets, how should traders respond, and what are the principles that ought to guide them?
Ministers are touring the UK to bolster support for the government’s Brexit deal ahead of a key vote on Tuesday. Sterling was lower this morning, while London stock markets mirrored buoyant trading on continental exchanges.
Crude prices dropped today as the 15-nation energy cartel OPEC met in Vienna to thrash out a deal to cut output. Key member Saudi Arabia is pressing for tough curbs on production to support the price.
Government defeats in Parliament over its Brexit legislation were followed by lower share prices in London. But worse may be to come in the event of a full-scale constitutional crisis.
The eurozone’s single currency, the euro, has lost about 17% of its dollar value in five years, and has declined also against the yen. But one bright spot has been its performance against sterling.
It may sound perverse, but successful traders are those who embrace their losses rather than shun them. Successful traders use them to learn what strategies work and which do not. The positive aspects of loss can be grouped under six headings, each of which highlights why traders should love their losses.
The downward trend in the gold price continued this morning, in part a side-effect of higher US interest rates. But over a longer timescale, the price is more stable than it may appear.
French shares were higher this morning after Deutsche Bank advised traders and investors to “overweight” them. This is a much-needed boost for the Paris market after 12 months of decline and many will hope it marks a turning point.
Bitcoin headed lower again today as its 12-month rout showed no sign of ending. A split in its Bitcoin Cash spin-off and regulatory worries have cast a cloud over all major cryptocurrencies.
London’s blue-chip share index was higher this morning despite deepening uncertainty about the Brexit process. But sterling was down, as were domestic UK stocks, suggesting the drawn-out UK departure is taking its toll on financial markets.
Traders who thrive on stress and anxiety are in for a treat during the next 12 months as Britain’s tortuous departure from the European Union promises endless market turbulence. No-one can see the future, but there are some principles that ought to help traders navigate the choppy waters ahead.