After a 2016 of electoral upsets and unexpected market developments, it’s clear that there are lessons to be learned to prepare for future major volatility events. So for all the factors we aren’t able to anticipate, what can we take from the last twelve months?
The markets to watch
Clearly no major event has the same repercussions, but it seems wherever there’s volatility, there are always a few markets first in line for traders.
Take those who traded on China, Brexit and Trump, for example. In every case, the top three indices they rushed towards were the Australia 200, Wall Street and the Germany 30. Meanwhile in FX trading, AUD/USD and USD/JPY consistently feature in the top three currency pairs.
In light of the globally significant nature of these events, it may come as a surprise that traders in Australia were so focused on local markets. But it also continues a trend seen in many other countries – in France, for example, the CAC 40 and EUR/USD were consistently the most traded index and currency pair.
Trading goes mobile
Given that traders in Australia didn’t have to follow any of these events overnight to nearly the same degree as those in Europe, it makes sense that there would be less mobile trading than elsewhere.
But we still saw a sharp growth in mobile trades over the course of the three events: starting at 44% of trades for China’s slowdown, growing to 47% for Brexit and finally overtaking desktop trading at 53% for Trump’s election victory.
There is also a significant discrepancy between older traders and younger, who are far more comfortable with this new way to tap into the markets. This suggests not only that the mobile trading sphere is more important than ever, but that how clients trade looks set to continue to evolve over the next few years.
Untapped potential in unfamiliar markets
Despite the significant market shift brought about by the Chinese slowdown, IG clients were more reluctant to get involved than they were with the US election or Brexit.
For those who took advantage, the Australia 200 and AUD/USD were the orders of the day, offering a way to gain exposure to the Chinese fallout indirectly. This is likely due to a lack of familiarity with the yuan or China 300. But with the Asian powerhouse’s ever-growing bearing on the world stage, it may well be worth getting to grips with new markets like these moving forward, as opportunities for shrewd traders start to arise further afield.