The drama around Brexit does not end. Late last year (2018), Theresa May, the UK prime minister announced that she was postponing the vote on her Brexit deal until early January 2019. This vote has taken place, and she lost. In short, her Brexit deal was rejected by the House of Commons MPs. She then stated that she would take an amended agreement back to the EU for discussion.
The latest news on this front is that May took the same deal back to the European Union, and they were not impressed. And, finally, the European Union has agreed to give the United Kingdom a six-month extension period. Therefore, the final date for the UK to leave the EU is now 31 October 2019.
This has had an impact on the price of the GBP against all other major and minor currencies. Interestingly enough, the GBP strengthen substantially against the EUR and the USD when the result of the Brexit vote in the House of Commons was announced. However, there has also been increasing talk about a No-Deal Brexit. Therefore, the question that is at the front of everyone who trades on CFDs minds is how to trade successfully during the current market volatility caused by Brexit.
The impact of global geopolitical and socio-economic events on the world’s financial markets
At the outset of this commentary, it is vital to remember (and be cognisant of the fact) that the world’s financial markets take their direction from both the geopolitical and socio-economic events that have both a direct and indirect impact on the country where the market is housed. Therefore, the London Stock Exchange and all the currencies linked to the GBP are (and will be) affected by the continuing Brexit crisis.
Furthermore, it is also important to remember that markets take direction from each other. And currencies are always bought and sold in pairs. Therefore, any event or crisis linked to the GBP will, in turn, affect all the markets related to the GBP-linked currency pairs.
Navigating the Brexit crisis
Consequently, in order to trade profitably during the continuing Brexit crisis, it is vital to look at tips to consider before placing any trades linked to the GBP. Thus, here is a list of important pointers to guide and help you:
Online trading broker
The first and most important point is to ensure that you trade with a bona fide Forex trading broker that places a high priority on ensuring that its traders have the best chance of trading profitably. It doesn’t help to open a trading account with the first broker that you come across. You will end up losing most, if not all, of your initial trading deposit if you do not take care that you trade with a legitimate, world-class broker.
Scientia potentia est (Knowledge is power)
It is critical to ensure that you know how to trade CFDs successfully. The fact is that trading CFDs is not merely a case of opening a trading position and closing it a short-timer later. It is vital to read the statistical graphs, indicators, and oscillators provided by your broker to determine your trading strategy.
The different technical indicators and oscillators like the Relative Strength Indicator, Moving Averages Indicator, and Bollinger Bands need to be added to a candlestick chart of a currency pair’s price over time to determine historical and current pricing. Which, in turn, will help traders predict and forecast future price movements.
Furthermore, it is equally essential to include fundamental analysis into account when determining a trading strategy. As an aside, a useful fundamental analysis tool is the Economic Calendar. It shows all the major news events like the US jobs numbers release that will have an impact on trades placed before, during, and directly after the event.
The importance of determining a trading strategy and sticking to it
A trading strategy can be likened to a battle strategy. No successful army general goes to war without planning his strategy in detail before sending his troops into battle. In the same way, a trader that wants to trade profitably needs to plan and implement his/her trading tactics before opening a trading position.
These are just a few of the salient points that are vital for successful and profitable trading. It is also vital to note that it takes time to garner the knowledge necessary to plan and implement a profitable trade.