Great News!

Greetings.

This has been a great year for trend trading political news; Brexit, US Elections. I noticed that the moves in both events substantially dwarf the movement attributable to standard Forex Calendar data releases; NFP, CPI etc…

As a brainstorm for anybody wanting to trade potential high impact political news - I wanted to create this thread as a comprehensive as possible list of upcoming political events (1 - 5 Year horizon) that you think will move a market whichever direction by at least 200 pips, surrounding the announcement.

So that anyone can go about their research of trade opportunities/methods with an exhaustive list of potentials to look out for.

Things that immediately come to mind:

[B]Event[/B]: Interest Rate (not strictly politics)
[B]Currency[/B]: GBP
[B]When[/B]: 15 Dec 2016

[B]Event[/B]: Brexit Article 50
[B]Currency[/B]: GBP
[B]When[/B]: Circa March 2017

[B]Event[/B]: Italian Constitutional Referendum
[B]Currency[/B]: EUR
[B]When[/B]: 4 December 2016

[B]Why may it be important[/B]: if prime minister loses the referendum it could trigger a referendum on Italy’s membership of the EU with potential to reignite the Euro zone crisis. Bond prices already falling in response to a potential Trumpean reflation in america, bond yields rising. Italy has amongst the worlds largest national debt.

[B]Likely Move[/B]: Implied volatility for the day from Call and Put Options prices as of 18/11/2016 is 120 and 112 pips long and short receptively. Potential R:R 1:7 @ 15 pips Stop Loss.


On what grounds do you say this?

Not even Italian politicians are saying this…

EU leaders back Renzi’s constitutional reforms and hope for a yes vote, but if he failed it is not

a given that the system will implode.

PS: I am Italian.

Ciao PipMeHappy, thanks for the input. The info is from daily political commentary by the BBC the suppositions is that in the unlikely event of a loss, the prime minister may have to resign giving the opposition 5 star movement a chance to launch a referendum on membership of the EU.

Please fell free to add your own political potentials to look out for.

According to some, this is the referendum holds the key to the future of the Euro.

And it looks like the polls currently are in favour of “No”.

no, nothing wil implode but a no will trigger new problems which are potentially dangerous.
the reason why this referendum is dangerous is because Renzi said he will resign as PM of italy if the refendum fails which will lead into new elections in italy. out of that the problem of new leadership arises as the actual leading party in polls is a anti euro party. mille stelle movement or such a name, dont know the name sorry, i know has something to do with stars and some number

Time to short EURUSD?? (Position trade)

if refendum fails you can try shorting the euro, yes. by human logic this should be right. but you know markets often arent logic.

…Renzi has not made this his career goal, though he does represent the ‘charismatic leader’ politics of post-Berlusconi Italy.

Here is an excerpt from a Credit Suisse report from THIS MONTH saying that if the ‘no’ vote in Italy’s constitutional referendum were to win, there would be only a 30% chance of Renzi stepping down and only a 1% chance of this triggering an ‘Itexit’ from the EU, AND a 70% chance of Italy having stability thanks to a ‘technical’ government.

If you did not know, Italy already had TWO ‘technical’ governments - Monti, then Letta - when there could be no elected government in the pre-Renzi years…so, it is not a new animal …

Cinque Stelle are in disarray with their lack of structure and the death of their founder (not Grillo), and their Rome mayoress having proven to be an abject failure, personally and politically - their only chance to prove to protest voters that they could do things differently once in the corridors of power.

Conclusion: do NOT bet on a ‘no’ vote equalling a golden goose and go short the Euro.


didnt know these facts. thank you very much for setting this straight. as usual medias all over the world blowing things up and pretending theyre bigger than they truly are.

Again…anything is possible in the ‘post-truth’ era, so I not saying all is rosy with Italian politics …or Italian debt.

I would wait for definite trend to form before getting in on a position, the technicals would be reliable here because there is a fundamental reason for the move rather than it just being the result of daily volatility.

A simple price cross over the 14 period MA might work well; or you might want a price cross of the 3rd standard deviation of the 14 period MA to be statistically sure there is a genuine cross over; that’s all assuming the market response is characterised by a ‘steady’ move in one direction or the other.

If there is a precipitous ‘spike’ then some variation of the straddle might work best. Not sure how to prime yourself simultaneously for those two possibilities.

Personally going to wait and see, it may be the case that nothing significant happens at all or the moves are too choppy to safely get in on.

PipMeHappy:

Thanks for the on the ground feedback. I hope whatever the case may be there will at least be enough uncertainty to create some action.

Greetings

The 4th is this weekend. Any ideas on how market open might play out on a Yes or No vote.

No idea…

The Italian banking system is in crisis and although J.P. Morgan have stabilised the balance sheet of MPS (Monthe dei Paschi di Siena), there is plenty of weakness with non-performing loans and bail-ins in place for a number of other banks… Italian stability is not tied to this referendum… Also, there are 4.5 million Italians voting from abroad, so there will be potential counting issues that will delay the result… So the market reaction cannot be immediate, nor one-directional. Plus, the Yes or No vote will impact Italian politics first and foremost, not Europe… Yet, as they say, a market bubble can burst for the most unsuspected reasons…Usually when an event is expected, markets pre-position or hedge their exposure, so this is not an unexpected event of the sub-prime mortgages kind, à-la 2008… I seriously doubt that you will see much at all in currencies… EurUsd has done very little in two years…you could throw the kitchen sink at that pair and it will not budge out of its 1.05-1.15 range.

Interesting. We will have to wait and see.

The polling booths will close at eleven o’clock tonight (10pm UK time), and the

results will not be known until later in the night…

Therefore: there may well be movements in Euro pairs (or other assets) from the

Asian open tonight, but especially at the Frankfurt and London open - when not just

exit polls but the actual results will probably be announced.

My only hope is that there are clear trends forming and not some kind of spike or choppy activity. I’m looking at putting 2-5% of account balance at risk.