Brexit – EU Referendum Polls Open On June 23rd.
The polls conducted by various newspapers, media and websites have a neck-to-neck battle. The murder of MP Jo Cox has altered the polls by 5-7% in favor of remaining in EU. People are showing nearly a 50-50 opinion and the balance of vote may be held by the undecided ones. Keeping in mind twitter feeds & interviews of politicians, traders have been backing GBP and it has seen a 3 week high.
If Brexit is averted, it is believed the pound could surge to 1.6 levels. If Brexit goes through, it is believed the Cable will fall a minimum of 15-20%. These are vast swings in market especially for small or mid-size traders. The Sterling may be at a three week high for now, but it is still 7% lower than it should due to Brexit fears.
Brexit Affects Brokers and Traders
Not only are Forex traders in fear of what may happen, but brokers are also not above it. This event has the brokers holding their breath as they recall the SNB shocker in January 2015 which bankrupted several midsize brokers and wiped out many traders from the Forex game. The results of the Referendum will be announced during market open hours which will result in sharp moves by the pairs containing UK and Europe indices. The market will be fast and furious, and the brokers have geared up for it.
Main players in the brokerage business have introduced restrictions such as curtailed the opening of new trades on exotic pairs of sterling with low liquidity. For many brokers, the margin has been raised to 4-5% on the sterling pairs whereas the margins on indices have been raised by 1%. The margin on Brent crude oil has also been raised. The restrictions will be in place until June 28-30th, depending on the broker.
The management is ready for Brexit by introducing the restrictions on the trading practices but even the Forex tech industry has prepared for Brexit Week. Swiss National Bank Calamity raised issues between brokerages and their tech providers, but tech providers had weeks in advance to prepare for this event. They have placed disaster recovery solutions for both MT4 and B2 platforms.
Brexit – Will you Trade?
Brexit week is not for the weak of heart. This high volatility may not be a good environment for newbies or less experienced. Many new traders burn their accounts during events like GDP Ratio, FOMC Meeting Minutes and Non-Farm Employment announcements. But this event may see volatility that will far surpass those events. Forex traders – remember last year’s SNB shocker. You may decide to sit this one out, and if you do decide to trade please be careful!
Margin changes and trading policy changes on different platforms:
- ADS Securities
- Admiral Markets
- Vantage FX
- AFX Group
- Capital Index
- Saxo Bank
- IG Group
- CMC Markets