Prime Minister Theresa May speaks on “Brexit” Tomorrow, 17 January 2017.
Media reports over the weekend suggest she will probably deliver “hard Brexit” rhetoric.
If she indeed signals a “hard Brexit”, GBP could tumble again, but as this scenario may be largely priced in already, the downside may not be that severe.
We would stay careful of a potential “sell the rumor, buy the fact” reaction in GBP, in case the media reports were incorrect and she surprises investors.
*All trading involves risk. It is possible to lose all your capital.
Be aware of expected high volatility ahead tomorrow!
How do you prepare for “High Volatility”?
If you know that a “high volatility” is coming soon, then you just need to prepare for that moment. But how?
Let us point out some methods to prepare for upcoming high volatility.
1. Don’t trading at all and no open positions
This is a one way to get through high volatility. If you are running an EA that isn’t suited against volatility, then you may also stop that working.
2. Hedging, but not too much
You can hedge positions as a temporary measure, but you may not want to do that too much. Because “high volatility” may cause wider spread, and that will require more margins to maintain hedged positions.
3. Trade with smaller volumes
“Slippage” is a big enemy against retail traders. To avoid that as much as possible, you may trade with smaller volume. You may not be able to avoid slippage completely, but may be able to minimize the damage.
Volatility is always opportunity.
You can always take advantages of high volatility in market prices. But you must remember that if you are looking for a high return investment, then high risk may be involved in that.