Tips for trading Brexit
Tips for trading Brexit
Be ready to go long or short whenever opportunities arise
Why trade Brexit with IG?
Our guaranteed stops only incur a fee when triggered2
How to trade Brexit?
You can speculate on any Brexit news or developments by trading financial markets such as shares, forex pairs and indices. Many of these assets will be sensitive to the outcome of negotiations during the transition period, with the FTSE 100, UK stocks, GBP/USD and gold all likely to experience some movement.
CFDs enable you to speculate on markets that are falling as well as rising, giving you plenty of opportunity to capitalise on volatility without taking ownership of the underlying assets. They are also leveraged, meaning you can gain exposure to a large position without having to commit the full cost at the outset. While leverage enables you to spread your capital further, it is important to keep in mind that your profit or loss will still be calculated on the full size of your position.
If you prefer to buy stocks outright, you can do so with our share trading service. This enables you to profit from increasing share prices, as well as by receiving any dividend payments issued by the company.
How will Brexit affect GBP?
How Brexit affects GBP will depend on the state of negotiations during the transition period, which ends on 31 December 2020. The UK will attempt to ‘roll over’ the existing free trade deals that are in place between the EU and other countries, such as Canada. It also has the task of negotiating a new trade deal with the EU, which will take effect once the transition period ends.
The UK will remain a member of the EU customs union during the transition period – so GBP could behave much in the same way as it has since the 2016 referendum. This means the pound will likely remain volatile, especially given the possibility of new trade deals with the US and other leading global powers.
How do I hedge Brexit risk?
You can hedge your Brexit risk by opening positions that will turn a profit if the assets you own start to lose money. With IG, you can hedge against:
We’re the only provider to offer GBP/USD and the FTSE 100 on the weekend, so you can offset your risk whenever volatility arises.
Share portfolio risk
We enable you to go short on major indices and over 13,000 shares, so you can protect your entire portfolio from downside risk.
We offer forex pairs including GBP/USD, EUR/GBP and GBP/EUR, enabling you to insulate yourself from currency risk.
Use our platform tools to stay ahead
Take control with guaranteed stops, which only incur a fee when triggered2.
Set alerts with the only provider to offer percentage and point-based monitoring.
Stay ahead of volatility with indicators including average true range and Bollinger bands.
Create a live account with IG, place and close your first trades
Find the analytics tool in My IG, on the left-hand menu
Explore reports of your closed trades. Once you’ve placed over ten trades you’ll also get these via email
Markets to watch during Brexit
The table below shows live prices for some of the markets which have been, and which could be, most affected by Brexit. Read on to find out more about each of these.
How will Brexit affect the FTSE 100, UK shares and gold?
How will Brexit affect the UK stock market?
The impact of Brexit on the UK stock market largely depends on the outcome of any trade deals between the UK, the EU and other countries around the globe. The degree of access to international markets that these deals grant will have a direct effect on the UK stock market.
What shares opportunities will Brexit bring?
The continued volatility surrounding Brexit and the transition period provides plenty of opportunities for traders looking to go long or short.
The list below includes some shares which could increase in value if trade negotiations are successful. They are domestic UK shares, so leaving with new trade deals in place would cause the least damage to their interests:
- Persimmon (PSN) – one of the UK’s largest new home builders, with considerable operations across the UK
- Travis Perkins (TPK) is the UK’s largest builders’ merchants, supplying over 23,000 trade products to many companies which consider it a go-to for building supplies
- Lloyds Banking Group (LLOY) has primary operations in England and Wales, so stands to gain from a smooth transition
How will Brexit affect gold?
As ever in times of uncertainty, investors look to commodities such as gold to provide a haven. After experiencing a spike following the initial referendum in June 2016, gold’s price has largely settled over the last couple of years. That is not to say that it couldn’t spike again, especially given the uncertainty surrounding the next steps for the UK’s departure.
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1 Number 1 in Australia by primary relationships, CFDs & FX, Investment Trends November 2021 Leveraged Trading Report CFDs & FX, Investment Trends December 2020 Leveraged Trading Report
2 A small premium is payable if a guaranteed stop is triggered.
3Trading is available around the clock, apart from 5am Friday to 11am Saturday and 20 mins just before the weekday market opens on Sunday night.