ELECTIONS MARGINS UPDATE, Managing Event Risk Around the 2020 US Election & Futures Levels 11.03.2020 - Support & Resistance Levels

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ELECTIONS MARGINS UPDATE, Managing Event Risk Around the 2020 US Election & Futures Levels 11.03.2020

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ELECTIONS MARGINS UPDATE:
Most of Cannon clearing partners and risk managers have increased margins to full overnight or what we call 100% margins even during the day.
This does NOT apply to all platforms and clearing houses we work with. Some only raised margins for during the night time and some also raised margins through out the day.
Most platforms will have a notice when you login regarding margins.
Cannon offers over 10 different platforms via 5 different clearing houses.
If you are a client who day trades and utilize day trading margins – PLEASE confirm with your broker what are the current margins based on the platform you use and the markets you trade.
We will keep you posted to the best of our ability but make sure to reach out to your broker if you have ANY questions.
Managing event risk around the 2020 US election
To help you navigate uncertainty, we take a look at how markets moved in 2016.*
By www.cmegroup.com
Elections and referendums with distinctly divergent market scenarios depending on the outcome of the vote can create significant event risk. That type of event risk is characterized by a binary choice: “A” or “B”, with both outcomes have meaningful probabilities such as 50-50 or 60-40. We saw this back in June of 2016 with the Brexit referendum: “Do we stay or do we go?” We also saw event risk in the US Presidential election in November 2016.
Election event risk has the potential to move markets once the outcome becomes known because pre-event, markets typically price the probability-weighted average of the two conflicting scenarios; that is, essentially the mid-point of the post-event scenarios. This means that once the outcome is known, the market will move quickly to the winning scenario.
The charts below depict how the 2016 election impacted multiple products and asset classes, all offered for trading by CME Group.
*Please note, past performance is not indicative of future results
  Source: CME Group
  • In 2016, price volatility spiked eight weeks prior to the election, followed by a downtrend.
  • In 2016, this downtrend stopped (and reversed course) on election day and in the days after.
  • Price volatility peaked on election night, and it took approximately 10 business days to revert back to the same levels as 10 days prior to the election.
  • The expanding trading range pattern prior to the election appears to be following a similar trajectory in 2020.
  • Despite the similarity in trend, the trading range in 2020 is wider compared to 2016.

 Source: CME Group
  • In Gold, we saw a similar tightening of trading ranges, similar to E-mini S&P 500 and the 10-Year Treasury prior to the election.
  • In 2016, this downtrend stopped and reversed about 10 days prior to the election and spiked on election night.
  • Trading ranges of Gold are wider now compared to 2016.

 

Good Trading

Trading Futures, Options on Futures, and retail off-exchange foreign currency transactions involves substantial risk of loss and is not suitable for all investors.  You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. You may lose all or more of your initial investment. Opinions, market data, and recommendations are subject to change at any time when it comes to Futures Trading.

 

Futures Trading Levels

11-03-2020

 

Economic Reports, source: 

 www.BetterTrader.co

 

This is not a solicitation of any order to buy or sell, but a current market view provided by Cannon Trading Inc. Any statement of facts here in contained are derived from sources believed to be reliable, but are not guaranteed as to accuracy, nor they purport to be complete. No responsibility is assumed with respect to any such statement or with respect to any expression of opinion herein contained. Readers are urged to exercise their own judgement in trading.

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