Volatility Tidal Wave Approaches
Updated: Aug 17
Day traders are gearing up for big movement over the next 4 weeks. The Presidential election is coming in the next month, and the uncertainty in the victor, alongside COVID uncertainty, is bound to spur the markets into volatile swings. Day traders make more money during volatile periods, because it provides them with more opportunities in market swings that they can profit from.
The Presidential election is one of very few moments within 2020 that can stand out from the rest; the year has had so many catastrophes it's hard to keep them all apart. But this is a defining moment, at least the markets see it that way.
Earlier in the year around April and May, the Democrats were unorganized and clawing each other for the candidacy. It took a second time of the DNC cheating Bernie Sanders out of the election race for Joe Biden to gain control at the party's center. And since then, they've slowly risen in popularity almost solely because of Trump's novel stupidity on a regular basis.
The markets have already priced in Donald Trump winning the election. "Pricing-in" is the simple way of saying "the market already expects it to happen". We can see this definitively as there has not been a significant movements across industries. As the market calculates the probability of a Biden Presidency, certain industries such as Healthcare and Industrials will decline. This is because with a Democratic President, it's more likely that Democratic policies are put into place that will stifle these two industries.
The markets as a whole will likely be thrown into a tailspin if Biden wins the Presidency. The markets will likely swing up and down throughout the debate cycle, as the probabilities shift back and forth. With all of this uncertainty, we always remember rule #1, never lose money. There's no shame in sitting out these volatile days for a market 6 months or a year from now when the post-COVID boom has the markets firing upwards.