Will the 2020 United States presidential election upheave the markets?

Hello Traders:

The 2020 United States presidential election is here and traders are expecting high volatility in the markets.

My Take
Nothing unusual and nothing extraordinary will happen in the markets. The markets don’t surprise people when they’re looking out for such; surprises come only when people don’t expect them.

Let’s use an example of an eye that has seen the ocean and the sea. When that same eye observes a pool of water in the bathroom, it would be as though it has seen nothing; when compared to the ocean and the sea. The effects of the election on the markets might turn out to be a pool in the bathroom.

I forecast that the elections might bring a measure of volatility, but the volatility would pale into insignificance when compared to what happened as recent as March 2020. Those March events caught the world by surprise.

There are many examples like that. So elections are being held in the US, and you’re expecting something extraordinary? Sorry, the market has a knack for going against the expectations of the public. Because you expect storms in the markets; the storms won’t be as extraordinary as you currently imagine.

 

We may see a continuation in the current market directions or spikes in opposite directions, followed by trend continuations. It may even be complete and sustained changes in trends. But whatever happens, it is not going to be anything new or unusual.

What I Will Do

That is why I hold some positions. If things go against me, I can’t lose more than say, 1.5% per trade (perhaps huge slippage and spreads factored in). In case things move in my favor, then I would be grateful for whatever the markets give me. After all, my rewards are always higher than the risk.

 

What can you do if you disagree with this post?

The answer is simple. Stay out of the markets. But you will realize later that there is no big deal after all.