Brexit, anyone? | Forex Factory

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Attachments: Brexit, anyone?
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Brexit, anyone?

  • #1
  • First Post: Edited 4:03pm Apr 8, 2016 3:51pm | Edited 4:03pm
Hello All,

On June 23 the Brexit vote takes place. As you all know, the EURGBP has soared to 0.80700+ and counting:

Attached Image (click to enlarge)
Click to Enlarge Name: eurgbp.jpg Size: 95 KB


The latest Financial Times Brexit poll states a mere 2 point difference (at the time this was written) :

https://ig.ft.com/sites/brexit-polling/

Consensus is basically:

  1. STAY = EURGBP tanks
  2. LEAVE = EURGBP lifts off

Anybody looking at this trade?

  • #2
  • Apr 8, 2016 6:43pm Apr 8, 2016 6:43pm
,,, I was really excited when I saw this thread,,,,, as it were ,,,,,
.... laughing all the way to the bank
  • #3
  • Apr 11, 2016 3:46am Apr 11, 2016 3:46am
I've seen 'no-brainer' situations like this come up a few times and they're often account ruiners. Eg, Iraq war 2003, presumption that oil price would skyrocket if it was invaded. It didn't - it tanked for 9 months or so before then rocketing up. So first rule - draw your line in the sand, long above, short below but don't hold on to any strong views.

What makes it more complex is that it's not a given the £ will sink if we exit. Odds on it will at least to start with due to tariff, trade issues and uncertainty but the pullback before the main move can last weeks if not months. Also, there's definite upsides to counter this - no EU payments, also not on the hook for any other countries bailouts either.

Finally, EURGBP is an odd pair to choose- the EU will suffer greatly if UK leaves even though loads of countries want us to - meaning euro weakness.

Based on pure fundamentals, I'd say long GU if we stay, short EURUSD if we leave. But I'd still let price prove me right or wrong.
  • #4
  • Apr 11, 2016 5:21am Apr 11, 2016 5:21am
It seems to me that the UK will not leave from the EU structure. On the one hand, we can understand the United Kingdom and its government, and perhaps it will be right for them, but for the EU - this catastrophic trend.
  • #5
  • Apr 11, 2016 1:32pm Apr 11, 2016 1:32pm
Quoting triphop
I've seen 'no-brainer' situations like this come up a few times and they're often account ruiners. Eg, Iraq war 2003, presumption that oil price would skyrocket if it was invaded. It didn't - it tanked for 9 months or so before then rocketing up. So first rule - draw your line in the sand, long above, short below but don't hold on to any strong views.
This is really good advice If it looks too good to be true...you make a great point! And your examples are great!

I must say though, that specially with the EURGBP, you can be pretty sure there will be some serious profit taking after the outcome (I believe it will be STAY btw)...the rally has been massive the last couple of weeks and it will certainly look for release in 2 fortnights....in my humble opinion. ....and yes it looks like a "no-brainer" to good to be true ....but as a trader, you live for moments like this.

I was glued to the screen after the UK's last election Cameron/Miliband.....the results came and it shot through the roof!! (with a very predictable result btw)....this pair tends to have the DNA to accumulate and store a lot of explosive momentum because it is so often exposed to situations like this....(the US has 2 biggies every 8 years....the UK would have had 3 in the last 1.5 years...) I'll certainly keep in mind your wise words triphop, but this goose, is going to get cooked!

(...and yes, the goose could be me...)
  • #6
  • Apr 12, 2016 3:12am Apr 12, 2016 3:12am
Lol, I admire your enthusiasm for it, and a short eurgbp soon is a fine trade full stop, irrespective of outcomes.

But here's one last thing to chomp on, zoom the H1 chart for GU out so it's as tight as can be over the election period. If the 7th May (election date) still jumps out at you I will not only give you a goose, but I'll cook it for you too.
  • #7
  • Apr 12, 2016 3:28am Apr 12, 2016 3:28am
Quoting meyoik
{quote} This is really good advice If it looks too good to be true...you make a great point! And your examples are great! I must say though, that specially with the EURGBP, you can be pretty sure there will be some serious profit taking after the outcome (I believe it will be STAY btw)...the rally has been massive the last couple of weeks and it will certainly look for release in 2 fortnights....in my humble opinion. ....and yes it looks like a "no-brainer" to good to be true ....but as a trader, you live for moments like this. I was...
No I don't live for news trades. For me red market news are like bush fires. People who say news trades are great are the same people that later complain about evil brokers widening spreads.

Also about the UK leaving the EU, people worry too much about it. Also the Pound is overvalued like a mofo. Because the UK is about 10% of the population of the European Union. There is no fundamental reason for the Pound to be this expensive except for some banks having offices in London
Price-Action Extremist
  • #8
  • Apr 12, 2016 8:04am Apr 12, 2016 8:04am
Quoting bagman
{quote} No I don't live for news trades. For me red market news are like bush fires. People who say news trades are great are the same people that later complain about evil brokers widening spreads. Also about the UK leaving the EU, people worry too much about it. Also the Pound is overvalued like a mofo. Because the UK is about 10% of the population of the European Union. There is no fundamental reason for the Pound to be this expensive except for some banks having offices in London
Hey bagman, you are a wise man I wouldn't take this trade myself if we get to June 20th with the polls split 50/50....that would be asking for it indeed. What I am considering, is if we get to T -3 days, T -2 days, T -1 day and the polls linger at around 55/45 in 55 would STAY, then I think there's an opening for a calculated risk trade here. For sure, it'll be a gut check at the end, if the conditions are not right, this is not a trade you want to be in.
  • #9
  • Apr 12, 2016 8:26am Apr 12, 2016 8:26am
Quoting meyoik
{quote} Hey bagman, you are a wise man I wouldn't take this trade myself if we get to June 20th with the polls split 50/50....that would be asking for it indeed. What I am considering, is if we get to T -3 days, T -2 days, T -1 day and the polls linger at around 55/45 in 55 would STAY, then I think there's an opening for a calculated risk trade here. For sure, it'll be a gut check at the end, if the conditions are not right, this is not a trade you want to be in.
Thanks. For me it's about getting at least 5% per week, early in the week, every week. Risking big once a month on a news strade with 4 weeks of nothing in between is something I don't want. Also I would not try to predict what a currency will do based on fundamentals. If that would work trading would be a lot easier.

Attached Image (click to enlarge)
Click to Enlarge Name: 13_3.jpg Size: 54 KB


This is from March NFP. I fished a few good trades out of it after it happened. But I did not care about it, because I made some money on Monday already. If you trade big on news trades you have a lot more pressure and you will have much more if you lose big and then have to wait 4 weeks to fix the damage
Price-Action Extremist
  • #10
  • Jun 3, 2016 3:39pm Jun 3, 2016 3:39pm
Quoting Trend.Follow
I have open some short GBPXXX positions for Brexit already. And you?
Yep. GU short opened on the NFP spike today.
  • #11
  • Jun 4, 2016 3:53am Jun 4, 2016 3:53am
NOTE: You might want to check with your brokers what their approach is on the upcoming Brexit vote. Some brokers are already increasing their margin requirements for GBP, and some even for EUR (!!!???) if you can believe that....
  • #12
  • Jun 4, 2016 4:30am Jun 4, 2016 4:30am
Quoting Trend.Follow
All other GBPXXX down but GU
Looking to pyramid this.
  • #13
  • Jun 4, 2016 6:12am Jun 4, 2016 6:12am
I won't be trading at all during this event. It'd be too risky. Not to mention that once the news come out order execution speed will probably slow down to a crawl.
  • #14
  • Jun 4, 2016 6:36am Jun 4, 2016 6:36am
This is the most important vote of our lives and my trade is just a punt. Rather than go to a bookie I opened another account. This isn't how I normally trade . No SL or TP. SL is account blowing up if it goes against me.
  • #15
  • Jun 4, 2016 7:52am Jun 4, 2016 7:52am
Quoting bagman
{quote} No I don't live for news trades. For me red market news are like bush fires. People who say news trades are great are the same people that later complain about evil brokers widening spreads. Also about the UK leaving the EU, people worry too much about it. Also the Pound is overvalued like a mofo. Because the UK is about 10% of the population of the European Union. There is no fundamental reason for the Pound to be this expensive except for some banks having offices in London
London has/is regarded as the Financial capital of the world, the pound is affected by this, look at price on the charts, its not over priced.
and look at when UK was out of the EU... GU was at 2.+... as soon as UK joined the EU its been losing value, there may be a shock to start with, but I don't think it will be long term if the UK leaves, (which I hope we do)
  • #16
  • Jun 4, 2016 11:43am Jun 4, 2016 11:43am
Quoting jen101
This is the most important vote of our lives and my trade is just a punt. Rather than go to a bookie I opened another account. This isn't how I normally trade . No SL or TP. SL is account blowing up if it goes against me.
If you don't have negative balance protection, you can end up with a big loss....does you broker offer NBP?
  • #17
  • Jun 4, 2016 12:13pm Jun 4, 2016 12:13pm
Quoting meyoik
{quote} If you don't have negative balance protection, you can end up with a big loss....does you broker offer NBP?
NBP is pointless. It is a marketing trick.

Leverage is an unsecured loan which means there is no recourse in the case of a default. I am a UK citizen and anyone suing me for money would have to go via the UK courts. In UK law there is a requirement for lenders to practice Responsible Lending. So in a court of law, the lender will have to prove that they did just that. Not a leg to stand on.
  • #18
  • Jun 4, 2016 6:43pm Jun 4, 2016 6:43pm
Hi jen101, I see your point. It is not my intention to kick off a never-ending thread of one said this the other said that, bla bla bla...but will say a couple of things:

You may call it a marketing trick, but it does give you an extra cushion of security; this "guarantees in writing" -whatever that means - that if you go past 0, they won't come after you. If a broker launches a marketing campaign around NBP, there is no court that would receive a case where 1000 clients went under...that, I would believe. If what you are saying is as black and white as you are putting it....hmmm I choose to note your comment, but would rather hear what a lawyer would have to say on how courts view this in real life AND in relation to an event as volatile as a Brexit vote. You maaaaaaaaaaay have a point, (don't know if +1000 ex-Alpari clients would agree with you) but I don't see any problem with simply taking the path of least resistance

If the option is there and there is no downside, why not take it...?

My 2 cents on this.

In any case...what type of trade are you going for? Long, short? Hedge? Levels you are eye-balling?
  • #19
  • Edited 6:13am Jun 5, 2016 4:09am | Edited 6:13am
Only pure market makers can give you NBP... they internalize everything and the negative balance is only virtual.
  • #20
  • Jun 5, 2016 4:29am Jun 5, 2016 4:29am
46% at stay leading lets see how it goes.
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