Published On: Wed, Dec 14th, 2016

Events in Europe May Influence CFD Trading


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By Contributing Author 

It is clear that the world is undergoing a populist swing to the right. Countries across the globe are becoming more conservative as concerned citizens are worried about the economy, unemployment, terrorism, and the influence of migrants on their home countries. The most obvious example is the election of Donald Trump as the president of the United States. The American right has chosen an inexperienced business man to lead their nation in a move away from the establishment parties.

The reverberations from this movement can be felt especially strong in Europe where the EU is facing a period of deep reflection and will need to decide what its future will look like. Take Brexit as an example. The referendum approved by 51.9% of U.K. citizens approved the decision to permanently leave the EU. This move in practice separates the United Kingdom from the rest of Europe in a bid to implement a more U.K.-centric, isolationist policy.

And just this week, Italy’s prime minister Matteo Renzi said he would step down following a failed referendum to reform the country’s constitution. Political analysts are asserting this is another example of the populist movement rearing its head. Yet, in an election in Austria, a far-right candidate lost the presidential election showing that not the whole content is thinking the same way.

“There are definitely trends that we’re seeing across the region, but one thing this weekend showed is that each country is different, ” said political science professor Dan Kelemen in an interview with Fox News. “We shouldn’t expect that just because the Brexit in the U.K., the election of [Donald] Trump in the U.S. and the rise of some populist leaders in Europe that the rest of the countries are going to go this way.”

The big question for traders is how all of these political changes will influence CFD trading and how they can capitalize on opportunities offered by political instability.

How Political Instability Influences Trading

Since CFD trading is based on the values of commodities and currencies, worldwide political changes undoubtedly have an influence on the markets. Traders that are able to foresee these changes can capitalize on them and may be able to make a lot of money. Brexit, for example, has led to a steady decrease in the value of the British pound. Traders that were savvy enough to sell British pounds before the currency’s downturn may have made money, while those that didn’t likely lost money.

There were similar results regarding the elections in the United States. Immediately following the election of Donald Trump, stocks began to fall as traders and bankers became worried about the prospects of a Trump presidency. But now, stocks are beginning to rise as traders speculate on how Trump’s policies may positively influence business.

Anyone who is involved in CFD trading through any of the platforms can take advantage of these changes to make some money. The key is to stay as informed as possible and to make decisions based on accredited information, not on a gut feeling. If you are able to stay well informed and can invest properly, you may be able to capitalize big time.

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