Should you avoid trading on inauguration day?Tomorrow morning the USA will switch presidents.
We can expect violent protests just like 4 years ago when Trump was sworn in.
But does this symbolic day represent a risk, and should we stay away from the markets?
My own (FX) trading has been pretty slow for 2 months following the US elections in early november, I think there was no conviction in any price action because of USA election uncertainty as well as Brexit, the pound gapped up over a weekend, down over another weekend, the market was not sending any clear signal to me, it was behaving like a lunatic and I avoided the pound.
What usually happens?
Looking at the past presidential changes, I noted the DJI gains and losses, I skipped the 2 vice-president presidents that were not sworn in after being elected.
There were all small days except the Obama one but even that one was not that crazy and it was in the direction of the trend.
There were no crazy gaps, nothing out of the ordinary for the past 70 years, both in the US stock market & Forex.
The craziest gap the EURUSD ever had was after the 23 April 2017 which was France 1rst round of presidential elections.
The result ended in Macron and Marine Le Pen going to the second round.
The 21 April 2001 Jean-Marie Le Pen was in the second round and he's way more nationalist and authoritarian than his daughter,
and the market did nothing crazy back then...
But this time participants were "worried of risk". Perhaps because of Brexit and also the world has become way more globalist since then.
3 years later that gap was the bottom...
Could there be a surprise?
The election uncertainty is over and we got an idea what Biden plans are although its not that clear he went from being against big spending and medicare for all to being pro it then against I think?
Will Biden stay president or let Kamala Harris take his place? He said if they disagreed he'd get sick and retire.
I don't really know anymore, so I think anything could happen.
Biden contradicting himself plus the US situation and Europe too leads to a sort of permanent uncertainty compared to 2017-2019.
That period had the "trade war" and "hopes" but that was not uncertain, the same thing repeated itself over and over.
On Trump's side, he said he exhausted all legal options and left it there. Terrified congressmen that were clueless 3 weeks ago (what a surprise! The capitol protest was not predictable at all!) got 30 thousand soldiers to protect them, under-reacting followed by over-reacting, typical. So whoever was not sure what would happen can now be pretty sure there won't be a coup. The FBI even looked into the soldiers I think. Anything is possible but I really don't think anything special will happen here. Trump die-hard supporters always think he has a master plan, a trick up his sleeve, but they do not manage big money.
What do I think will happen?
I expect a smooth transition, with protests just like in 2017, so nothing new, and the previous opposition now in power to continue their impeachment, then crackdown on free speech, and then act surprised when it backfires horribly on them 😂
(Did you know Rudy Giuliani tried banning "hateful anti-religion" art when he was mayor of New York?)
It's really funny to see how clueless everyone is, and how it seems like they try their hardest to pave the way for a fascist government.
Support of abortion will be hate speech and severely punished, gender stuff will be hate speech, and so on.
Their crackdown on "hate speech" will backfire so hard it will be hard not to laugh. I can guarantee this with 99.99% certainty.
There is no new info (unless we get a big surprise) so why would markets do anything "special".
This is only my opinion not a risk management recommendation, I just personally think there is no reason to stay away (or hedge risk) tomorrow.
