Video Transcript:
Hello everyone, it’s Dale
here, and in this video, I’d like to talk about how we as traders can approach
trading around the U.S. presidential election. What you see before you is the
website of Polymarket, one of the
largest betting companies. Right now, you can see that according to them and
their data, Donald Trump is leading. According to their figures, there’s a 61%
chance that Donald Trump will win and a 39% chance that Kamala Harris will win.
Now, I wouldn’t advise you
to take this as a leading indicator, but Polymarket is one of the biggest
betting companies, so it can at least tell us how they view the election.
Yesterday on my YouTube channel, I conducted a little poll on who will win the election,
so let me show you the results.
Here is our poll. We have
three candidates: Donald Trump with a 63% chance of winning, Chuck Norris with
a 22% chance (though I believe his chances are much higher), and finally,
Kamala Harris with 15%. Alright, so that’s our little poll on our YouTube
channel. However, despite the results, I think there’s no doubt about Chuck
Norris winning the election.
Now, let me quickly show you
the outcome of what would happen if he wins. If Chuck Norris wins, things will
be very simple. Regarding currency, there will be only one currency: it will be
called the “Chuck Buck.” This is how it will look, and the exchange
rate will be straightforward: one Chuck Buck will be worth everything. For
stocks and indices, everything will instantly reach its peak value, because
nothing goes down when Chuck Norris is in charge.
In the unlikely event that
this doesn’t happen, let’s look at the other two candidates. Here’s a table
showing the scenarios of what I think would happen if either candidate wins. If
Trump wins, the U.S. dollar should strengthen as markets will expect a
pro-growth policy. The Euro might weaken relative to the U.S. dollar, as the
U.S. could become more attractive for investors. Now, the Japanese Yen is a bit
trickier, but my guess is that the Yen might depreciate, as it is a safe-haven
currency and demand for safe-haven assets could decrease if Trump wins.
For indices like the S&P
500 and other American stock indices, if Trump wins, they should go up as
investors would expect pro-business policies, such as tax cuts and reduced
market regulation. If Harris wins, it should be the other way around.
Here’s how we as traders can
approach this. If Trump wins, we should go long on U.S. pairs like USD/CAD,
USD/JPY, USD/CHF, and also on indices. We should go short on EUR/USD,
AUD/USD, and GBP/USD, meaning that the U.S. dollar and indices will
strengthen. If Harris wins, it’s the opposite: long on those pairs and short on
these, including indices.
Now, let me switch over to
the charts to show you the kind of volatility and reactions we as traders can
expect. What you see before you is the EUR/USD daily chart. This red
candle I highlighted is from the 2020 presidential election when Biden won. As
you can see, the volatility wasn’t too crazy. Not much happened initially, but
after the election, the U.S. dollar started to weaken, with the EUR/USD
going up, indicating a weakening dollar.
If we scroll back to 2016,
when Trump became president, this was the reaction: a 400-pip range on EUR/USD.
That day was pretty wild, and afterward, the U.S. dollar started to strengthen
immediately, with EUR/USD going down, meaning the dollar was
strengthening.
This is the kind of reaction
and volatility you can expect. Now, let’s switch to indices and take a look at
the ES, which is the futures for the S&P 500 Index. This is
the 2020 election when Biden won. As you can see, there was a selloff, but
nothing too extreme. There was increased volatility, but the market continued
its uptrend afterward.
Let’s scroll back to 2016,
and here’s what happened on the ES when Trump won. I hope you can see
it, but this is a pretty massive candle. First, it went down, and then, when it
was clear that Trump won, the index went up and started a new uptrend. It was
pretty wild back then, and as traders, especially if you traded this, you
should definitely be prepared for similar volatility.
My recommendation for you
would be to close your intraday and swing trades today because it’s very hard
to predict how the markets will react to the election, and things can get wild.
But if you decide to trade, my final tip is to look at the chart. Let the chart
tell you what to do, not the fundamentals. Take this advice from someone with a
degree in finance, where it was all about fundamentals. Let the charts tell the
story, and adjust your trading based on that.
So, I hope you enjoyed the
video. If you did, hit the like button and subscribe for more. If you want to
level up your trading game, visit my website, Trader-Dale.com, and click on “Trading
Course and Tools” to get my custom-made trading indicators and
courses. If you want to trade with me and other prop-funded traders in a live
room every day, click the button labeled “FTA” for the
Funded Trader Academy. There’s a video there where I’ll explain everything, and
if you’re serious about this, book a call with us. We’ll walk you through it in
a one-on-one meeting, so you can decide if it’s right for you.
Alright, that’s about it.
Thanks for watching, and I look forward to seeing you next time. Until then,
happy trading!
