Traders should be aware of the large risks involved with holding positions over the US elections [Video]


Listen for the latest market mood for the SPX.

There are reports that there has been some progress towards a stimulus deal, but not enough to make a deal imminent before the US elections. Equity markets recent falls have been due to the disappointment of no US stimulus deal looking likely before the US election.

However, with either a President Trump second term or a Joe Biden victory the US stimulus package is still expected to pass after the US elections. This means that any meaningful dips in the S&P500 before the US election should find buyers.

However, traders should be aware of the large risks involved with holding positions over the US elections next week and square positions before the elections.

Trade Risks

The main risk to this trade is some very negative COVID-19 news, like more shutdowns across the world, which causes equity markets to sell off sharply.

Another risk is if the chances of a US stimulus deal fade and/or the package offered is smaller than the market expects.

SP500

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High Risk Investment Warning: Contracts for Difference (‘CFDs’) are complex financial products that are traded on margin. Trading CFDs carries a high degree of risk. It is possible to lose all your capital. These products may not be suitable for everyone and you should ensure that you understand the risks involved. Seek independent expert advice if necessary and speculate only with funds that you can afford to lose. Please think carefully whether such trading suits you, taking into consideration all the relevant circumstances as well as your personal resources. We do not recommend clients posting their entire account balance to meet margin requirements. Clients can minimise their level of exposure by requesting a change in leverage limit. For more information please refer to HYCM’s Risk Disclosure.

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