Brexit Effects Expectations
Update 28 June 2016 11:00 WIB - Pasca BREXIT
- Spread fixed is back.
- Spread floating/fixed have further tightened nearing normal market spreads.
- Leverage 1:400 for Ultra Low Spread is back.
Happy trading !
Update 27 June 2016 17:00 WIB - Post BREXIT
Assessing today's post-BREXIT market, pending order level for pairs based on GBP, EUR, Gold and silver will return to normal*
Spreads for pairs based on GBP, EUR, Gold, and Silver have been tightened and is now lower compared to last Friday's BREXIT event spreads. We are expecting to return to fixed-spread on Tuesday 28 June 2016 market opening or earlier.*
*however, be advised that although today's market conditions are deemed calm and we are not expecting any major disturbances, conditions stated above may change should markets enter unexpected turbulences.
Update 24 June 2016 14:00 WIB - Post BREXIT
GB people have decided – they no longer want to be part of EU.
As expected .. prices did move wildly. GBP reached 1985 day low, Gold spiked over 100 dollar in just hours. If you followed our advise not to be “on the market” these few days, you’re safe. If you managed to “be in the market” and profit during those wild price movements – congratulations – you are one lucky speculator.
So what took place on MPF’s pricing during the main BREXIT party ? Our GBPUSD pricing went up to minimum spread of 100 pips ( 10 pips for 4 digit pricing ), EURUSD pricing went up to minimum spread of 90 pips ( 9 pips for 4 digit pricing ), EURGBP went up to minimum spread of 110 pips ( 11 pips for 4 digit pricing ), Gold pricing went up to a minimum spread of 1.5 dollar – considering market pricing, these increase in spreads are deemed acceptable , especially if take into account that we managed to hold non GBP non EUR pairs to normal spreads for those trading under Fixed-Spread scheme – Hooray to MPF !
Now the main party is over, here comes the post party. What to expect in the coming few days ?
- GBP and EUR based pairs will most likely stay under pricing stated above until early if not middle of next week.
- Gold spread have now been adjusted to a somewhat-more-normal levels and is holding around 60-70 cents spreads. However be advised that depending on the market, we may have to adjust these spreads as things develops.
- Those trading under Ultra Low Spread accounts will have their leverage remain at 1:100 until market closes. It will remain 1:100 at the opening of next week’s market, but we are expecting it to return to 1:400 as soon as market conditions permits.
- Special margin requirements applied to EUR and GBP based pairs will remain in effect until market permits it to be reduced.
- Special limit and stop levels will also remain as it is for the time being.
- Expect to still see wild price movements during the rest of the day and during US-market hours. This includes wider spreads, delay in executions and or extreme slippages.
- We are still advising you not to be “on the market” for today and the coming few days on next week.
- Expect to see gap in price openings for multiple pairs on next Monday market opening as things may develop during the weekend.
UPDATE 22 JUNE 2016 23:00 WIB – PRE BREXIT
Assessing market conditions prior to BREXIT, the following conditions will be applied on 22 June 2016 market closing:
- All FIXED-SPREAD forex pairs based on GBP and EUR and Gold/Loco will be adjusted to FLOATING/MARKET SPREAD. Please note that if you are holding locking/hedging positions, your account will be affected by this change. We advise you to reduce your positions/exposure before spread widens too large as we are nearing BREXIT’s results.
- Limit/stop level for forex pairs based on GBP and EUR will be adjusted to 500 points ( for 4 digit pricing ) or 5000 points ( for 5 digit pricing )
- Limit/stop level for gold/loco will be adjusted to 1500 points ( 15 dollar )
- Limit/stop level for silver will be adjusted to 150 points ( for 2 digit pricing ) or 1500 points ( for 3 digit pricing )
Please note that these are temporary measurements taken for BREXIT events. Normal trading conditions WILL return once markets are deemed normal.
Be advised that additional trade condition adjustments may take place prior, during, and after BREXIT event.
We will continue to assess market conditions and make necessary trading conditions to protect clients from BREXIT events.
Thank you for your attention.
On Thursday 23 June 2016 local UK time, UK citizens will be voting for Great Britain’s future to remain part of European Union or officially exit the union, thus naming the event: BREXIT ( Britain Exit ).
What will this means to the global market and your trading account ?
- Brexit voting or referendum will start on Thursday 23 June 2016 13:00 WIB and ends at 24 June 2016 04:00 WIB. We predict that wild price movements will begin before the voting starts and will start as early as Wednesday 22 June 2016.
- Brexit voting quick count is predicted to show results starting from 24 June 2016 07:00 WIB with it’s official count to be released on 24 June 2016 at 14:00 WIB. Although being a quick count, we predict that the quick count will have enough power to produce tremendous price spikes. Critical moments are predicted to start as early as the moment the first quick count data is released. Whatever is the result of the Brexit, it will not have good effect on market stability at the moment such result is announced. Prices are predicted to move in such fashion before finding it’s new market balance.
- Due to the fact that Brexit is one of the biggest financial and political event to take place in 2016, it’s scope is unprecedented, especially for forex pair based on GBP and EUR. It is commonly predicted that the event will also produce price movements for precious metals and commodities.
What you can do as a trader ?
- CLOSE PART OR ALL OF YOUR EXISTING POSITIONS. If you have any open positions, especially GBP and EUR based positions, you are advised to close part of all of your open positions before Brexit takes place. At the time of this writing, you still have around 24 hours to reduce your exposure to this event. Trading GBP and or EUR from tomorrow until early next week is very unadvisable.
- DEPOSIT/TOP UP. If you must maintain your GBP and or EUR based positions, we strongly advised you to deposit / top up in large sum to cover you exposure from the two currencies. As reference, some brokers, be it in Indonesia or abroad have started to apply Margin Requirement as big as $8000 per 1 lot GBPUSD or equal to 6 percent of value of 1 lot GBPUSD or equal to the usage of 1:25 leverage.
- PREPARE FOR BAD EXECUTION AND CRAZY SLIPPAGES. If you placed stop loss or take profit or market order ( especially GBP and EUR based pairs ) during Brexit, be ready to experience bad execution of your orders. We predict that crazy slippages will be very common during the Brexit event.
- SAVING YOU FROM YOURSELF. If you are our clients under Ultra Low Spread scheme, starting Wednesday 22 June 2016, we will reduce your leverage from 1:400 to 1:100. Please note that we are taking this step to ensure and protect your exposure from 1:400 facility and this step remains inline with our last week’s increased in margin requirement. 1:400 leverage will return after Brexit event ends and after market conditions are somewhat normal. We predict that this will happen sometime around early or middle of next week.
- PREPARE FOR PRICE UNAVAILABILITY. Be noted that we have received informations from the market saying that most, if not all, major banks, liquidity providers, prime brokers, those that directly involved with market quotations WILL NOT provide quotes during Brexit to cover their exposure from price uncertainty. What does this mean ? It means you must be prepared to witness price movements ( especially GBP and EUR based pairs ) of THOUSANDS POINTS up or down due to market uncertainty. Also be prepared to witness spread widens as never been seen before ( except during SNB ). It is therefore advised to observe and to take actions prior to Brexit as started on point 1 and 2. The decision remains in your hands.
- FIXED-SPREADS ARE NOT GUARANTEED. If you own an account and trade under our fixed spread account, Brexit event will fall under extraordinary condition. There is a 99 percent probability that we will not be able to maintain our fixed spread and will quote your accounts with wide non-fixed market spread. There is no maximum spread ( spread will be unlimited) , should this happen. This is not what we want to do but this is something that we are forced to do due to circumstances surrounding Brexit, market uncertainty, and global price balance. Be advised that we may not be able to provide fixed spread before, during, and after Brexit.
- STOP TRADING FOREX IF YOU THINK YOU WILL PROFIT DURING BREXIT. You are free to ignore the above warning and continue trade during Brexit. But be warned that trading forex during critical moments are pure speculation. This action is more like rolling the dice than trading forex. If you like this kind of action, we advised you to stop trading forex as this is far from what trading forex is all about. If you are a real forex trader, you do not trade this week.
In the end, let’s witness this historical Brexit event unfolds and see it’s impact to the global price balance, have a good day ahead and good luck in your future trades.
God Save the Queen