Brexit: What is the impact on forex trading?
The 31st of December 2020 is nearing, and whilst this date marks Halloween, this year another political event is set to take place – Brexit. Brexit is the scheduled departure date for the United Kingdoms exit from the European Union.
This week though, Boris Johnson the British Prime Minister announced that he finally he has agreed on a leaving deal with the European Union. Although this deal still needs to be approved by the Government and European Parliament, it confirms that Brexit is likely to happen at the end of the month.
Ever since the initial referendum took place in Britain in June 2016 that gave the leave result, there has been ongoing speculation about what will happen when the leaving date arrives. Of course there has been many political debates since then about how Brexit exactly happen.
Besides the political changes, Brexit has also affected the £/GBP price. In the last few months the Pounds value has weakened and dropped, especially when compared against the Euro.
There has also been discussion that a ‘No Deal’ Brexit is likely to have a damaging effect on Britain’s economy and affect trade. At present, the currency price and market volatility is likely to continue especially on December 31st.
However, with a volatile market comes opportunity, especially for online traders who are involved with Forex and CFD trading. They want to make a profit from the market volatility that Brexit is likely to cause, this demand has led to many online brokers to launch special Brexit trading portfolios for their users.
In this post we’ll be looking at some of the brokers who are offering special conditions and portfolios for Brexit. Hopefully then you’ll be able to see whether it’s also something that could be a good trading opportunity for you. Because whether Brexit happens this month or not, there will definitely be a lot of market changes in the next weeks that could be rewarding for traders.
Let’s take a look at some of the regulated forex brokers in UK offering Brexit trading now: https://tradingonlineguide.com/best-forex-trading-platform/uk/
Brexit Trading: eToro
eToro is the leading social broker with their social trading features and CopyTrader tool. The broker has millions of clients worldwide and is fully regulated by CySEC and the FCA.
At the moment eToro is offering a special Brexit trading overview which features live prices on key markets and strategy tips on how you can benefit the most from Brexit. They are also providing regular updates on how the situation could affect various sectors and which CFD instruments you should be watching.
They have a very detailed ‘Brush up on Brexit’ education page which explains all about the process and the various financial situations that could be affected by the change. This is a great educational tool if you want to learn more about the situation and the economics behind the market volatility.
Besides this eToro also has a full overview of the financial instruments that could be worth trading in with the live prices shown including stocks, commodities, forex and indices. For instance under the currency pairs overview they show the live GBP performance with the EURGBP and GBPUSD currencies listed.
Regarding the stock selection though, eToro has a good offering of British based companies listed from major retailers like Tesco to UK banks like Barclays and Lloyds. Having an overview like this is a great guide to making the most out of the political situation.
If you’re already a member of eToro you can start using their Brexit service straight away, but if you’re not it’s easy to create an account with the broker. Simply sign up and fund your account to start trading. The minimum deposit is $200, unless you’re a resident of the USA or Australia where the minimum deposit is $50.
Brexit Trading: Plus500
The last broker that we would like to mention is Plus500. Two things that Plus500 is known for is for offering commission free trades and for having 2000+ assets available for trading.
Although the company headquarters are based in Israel, Plus500 has a UK subsidiary with an office in London. They hold regulation licences from CySEC and the British based FCA.
When we checked their website, we saw that the broker now has a dedicated page on Brexit and related market news. Although they don’t have such a detailed guide or education page like eToro, we noticed that they have more strategic guidance.
For example, we noticed with Plus500 is that they’re generally trying to provide information on how traders can get through the Brexit uncertainty and use it to their best advantage.
To assist users, Plus500 has provided tips on risk management tools that can be used to assist when trading CFD’s during Brexit based price movements. This includes using the broker’s features like the ‘Close at Profit’ order to protect profits, and the ‘Guaranteed Stop’ tool make sure that your position closes at the set rate you have chosen.
Besides this, Plus500 also has an Economic Calendar available which provides real-time economic updates and events that are likely to affect the UK markets. It may be worth following this so you can keep track of any changes,
Additionally it’s also possible to set and receive trading alerts for instruments related to Brexit,(for instance EURGBP). The alerts are completely free to receive and are available for use on mobile and desktop devices. Keeping track on events is the key to staying alert on market movements.
You’ll need an account with the broker to use these features, however, if you wish to sign-up the process is pretty simple and fast to do. The minimum deposit is $100 and the broker allows for 5 free withdrawals each month.
Brexit Trading: ETX Capital
ETX Capital is a British broker that has their headquarters in London, so they’re very likely to be aware of the potential consequences of Brexit. They are known for offering excellent educational tools and trading webinars to their users, plus they are fully regulated and licensed to operate.
The broker currently hold regulation licences from the Financial Conduct Authority as well as CySEC. Regarding their Brexit offering, they have a dedicated page on the subject also with an overview on the process and explanation of the next steps. Although we noticed that their guide has not been updated for a while with new posts, but still all the core info is there.
Besides this ETX Capital has put the focus on their educational offering to cover the Brexit news with various webinars and a free course on how you can develop your strategies during volatile markets. They also have notifications available as email alerts which will keep you posted on any related political announcements.
To keep you in the loop on market changes, the broker’s platform features various analysis tools including charts. These can be used to your advantage in order to execute trades quickly and to spot trends as they happen. It’s also possible to receive price alerts on the platform app and desktop in order to keep track of price movements.
Author of this article and founder of Tradingonlineguide.com
My aim is to help you increase your trading knowledge with helpful content. I come from an economic background and have a strong passion for forex trading. With more than 6 years in the online trading world, I want to share my financial knowledge so that anyone can develop their investment skills.
In my spare time I enjoy cooking and travelling.
Here you can learn more about our review methodology.