Four reasons why traders should love Brexit

By Benjamin Weiss

Very few people can confess to loving Brexit. It either symbolises segregation and a regression of international relations, or has lost meaning of what it was originally meant to be and now (with talks of a second referendum or even no Brexit at all) undermines the very concept of democracy. But bypassing the Brexiteers and Remainers, the politicians and campaigners, one demographic that should definitely love Brexit is the traders.

Market fluctuation

Not too much is certain in trading – if it was, the industry wouldn’t exist. There’s also much uncertainty surrounding Brexit, specifically about the future relationship between the EU and the UK. So uncertainty is even more prominent than usual in trading, which only leads to market fluctuation as trends are even more difficult to predict.

Fluctuation has been common since Brexit’s birth, as people’s confidence in certain commodities, indices and stocks change frequently in reaction to the latest Brexit news. Traders and investors have tried to predict the implications following each Brexit negotiation or debate in Parliament, and have either succumbed or prospered from market fluctuation. Either way, it means more action to keep busy with while trading.

Market volatility

Not to be confused with market fluctuation, market volatility is the action of markets moving severely in one direction. A market can fluctuate by simply rising and falling by just one point but a number of times. However, a market can demonstrate volatility by rising or falling just once, but moving by a significant amount – a lot more than just one point.

Again, the uncertainty of Brexit relays across to markets, which in turn, are highly susceptible to vast, sudden changes. This comes as traders react to (almost daily) news that comes out surrounding the UK’s departure from the EU. Heavy volatility can be beneficial, as traders capitalise on steep and sharp price rises. However, with every success, there’s a loss waiting around the corner, so this market volatility can easily go against traders as well.

Chance to learn about uncommon markets

Brexit could be said to have awoken sleeping beasts when it comes to uncommon markets. Of course, the most commonly traded markets are the most popular ones such as; Apple Inc., Cable and Bitcoin. Now though, certain markets that were largely untraded have been affected by Brexit, giving them more relevance. These once ‘quiet’ markets have now been awoken by Brexit as they become more appealing to trade – due to the reasons already stated in points one and two.

More news and analysis than ever before

A final benefit of Brexit to traders is the amount of additional market information that is being created. Linking back to point three, analysis on markets that are not commonly traded may now be available due to Brexit casting a spotlight in their direction. Say, for instance, in light of the UK leaving the European Single Market, an increase in trade between the UK and Canada is largely discussed. From this news, traders may predict the Canadian dollar (CAD) to strengthen, and thus start trading CAD markets such as CAD/USD or CAD/EUR.

Even with the more common markets, the sea of information out there becomes an ocean. Every media outlet, analysis channel and trading site offers an increased volume of content on certain topics – linked by the common theme of Brexit – giving traders in general a more diverse overview of markets.  

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