While this was merely based on a one point lead for “Yes” campaign (to an independent Scotland) ahead of the “Better Together” camp, and still within the scope of a “margin for error,” it was a clear indication for us in terms of what to expect if Scotland to vote to become fully independent and for the subsequent break-up of the United Kingdom as we know it.
If Scotland does vote yes to independence, we can expect a fear-based correction in FTSE-listed stocks and Cable (GBPUSD) to plummet. After all, Scottish independence would be a “one in a lifetime” event. Markets don’t like such uncertainty.
If, however, Scotland vote “no” to independence and to remain an integral part of the United Kingdom, we can expect the FTSE and GBPUSD to rally off the back of this.
How does this affect us?
We are currently live in the FTSE (sell) trade (in progress), as per our trade idea (published 30th August). Our order to sell at the pen-ultimate all time high (stop-loss 50 points above the level) was triggered on the 3rd September.So, for that reason, we decided to move our stoploss to breakeven. If Scotland vote “yes” to independence, the FTSE will, in our opinion, plummet in our favour...but if it is a “no vote”, we do not want to be in the way of a potential bull rally – especially if our trade was initially in profit.
There is nothing wrong in making this a “free trade” and moving the stop to breakeven – the worst that can happen is that we make nothing but, crucially, also lose nothing.
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