The Brexit Saga Continues: How to Trade Profitably in These Uncertain Times

Theresa May postponed the final vote on her Brexit deal earlier this month because she realised that she would not get the vote through the House of Commons. The article published on The Guardian and titled “Theresa May postpones Brexit deal vote” stated that May had admitted that she would have lost the vote. Incidentally, this vote has been delayed until the week of 14 January 2019.

After May announced the delay of the Brexit deal vote, she also announced that she would seek a better deal from her European Union counterparts. She then traveled to Europe to visit the significant EU decision makers without much luck. In short, the EU was simply not amenable to changing the deal’s condition.

At the same time, some EU countries like France stated that Britain could cancel their Article 50 notice and choose to stay in the EU. On the other hand, rumors have also surfaced that members of the EU parliament were even heard to state that it would be better for the EU if the UK were to exit the European Union. However, this statement cannot be verified.

Finally, the latest news released on 18 December 2018 is that the UK government is ramping up preparations for a no-deal Brexit. Some of these preparations include:

  • 2 Billion GBP has been allocated to the different government ministries like the Home Office to employ more Border Force staff to protect the country’s borders.
  • Three thousand five hundred troops have been placed on standby to assist the government departments.
  • Private companies have been tasked with drawing up and implementing their no-deal Brexit contingency plans.

Brexit: Trading profitably during these uncertain times

It is vital to note that on 10 December 2018, in conjunction with May’s announcement that she was postponing the final vote on the Brexit deal that the GBP dropped to its lowest levels in 18 months against all other major currencies. On 12 December 2018, the Pound increased slightly when it was announced that Theresa May survived a no-confidence vote.

However, overall, the continued uncertainty and chaos surrounding Brexit are ensuring that the GBP/USD currency pair price continues to hover around its 20-month low mark. 19 December 2018’s data also shows that the GBP is flat against the EUR.

Therefore, the question that needs to be asked and answered is, how do CFD traders continue to trade profitably during the current political instability?

By way of answering this question, it must be remembered that Foreign Currency (Forex) prices, as well as most financial market asset prices, are impacted by global geopolitical and socio-economic events.

This fact is highlighted by looking at the current GBP-linked currency pair price movements. By studying the circumstances surrounding, as well as the reactions to Brexit, it is evident that the Pound is down against all of the other major currencies like the USD and EUR. And it will more than likely stay at its current price levels or even weaken further until good news comes out of the Brexit crisis.

Also, it is worth being cognisant of the fact that the purpose of trading on CFDs through a CFD broker is to trade on an underlying asset’s price movements. The linked asset is not bought and sold. Therefore, it is possible to trade profitably on the GBP-based currency pairs irrespective of which way the price moves.

In order to trade successfully, it is absolutely critical to use both fundamental and technical analysis tools to plot out a trading strategy before opening a trading position. Thus, here are several succinct tips to help you plan your trading strategy:

Fundamental analysis

Study the Economic calendar to ensure that there are no significant economic news events that will impact the price of an underlying asset scheduled for the day. Secondly, look at possible geopolitical events that have recently occurred or are about to happen that will play a primary role in affecting the asset’s price.

Technical analysis

The broker’s trading platform includes technical analysis tools that indicate price movement trends like candlestick charts, Moving Average Indicators, Relative Strength Indicators, and Bollinger Bands. By utilising these tools, it is possible to forecast the asset’s price movements and apply this information when determining the best trading strategy to use.

Final Thoughts

As this article indicates, it is possible to trade profitably during geopolitical and socio-economic uncertainty. However, care needs to be taken to mitigate the trade’s exposure to the risk of turning from a profitable investment into a losing trade.

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