Do you know what traders from big hedge funds did first before the Brexit voting? Investing in large wagers perhaps? Absolutely not! Just the opposite.
All experienced traders decided to pull out their money and stockpile their cash, waiting to see how market will react. Instead gambling with their money, they were trying to anticipate some hidden investing opportunities. In other words, they decided to go low profile and wait for the perfect moment. The same thing as what the majority of XTrade Europe traders did at that time.
Time To Say Goodbye…
We also think it was the best thing they did. As we know, the decision of the British citizens to say “goodbye” to the EU, caused a huge turbulence on the global market. The weakening of the British pound was just one among many other consequences. Those XTrade Europe investors who were careful enough and who waited to see what this new situation will bring managed to save their capital for better opportunities.
One of the leading portfolio managers at Point72 Stan Busquet says that all people who are in the online investing business should go with just a few positions, because it is the only way to save capital for the future events. It is a good point. If we already have invested all our money in different positions, we just will not be able to be focused on new opportunities that appear now, after Brexit. This is the advice that all XTrade Europe investors should follow. In other words, do not throw your money around, even if you think you have enough capital. The last thing we want to happen here is to capture all our money in a bad investments. It would be like swimming with our hands tied. You do not have to be an expert to understand it is the situation that has to be avoided.
According to the Merrill Lynch report, days after the Brexit were specific because they forced traders to allocate the majority of their portfolios to cash. It cannot be said it is the usual behavior on the financial market. The last time when we had such “cash hysteria” was in 2001, when the global market almost collapsed.
However, Brexit did not affect only individual investors, but also a big dealers and online brokers such as XTrade Europe. They also became more careful. This means that they started to reject huge bets, simply because they wanted to save their own interests. They are also aware that such big changes in the world’s politic and economy have extreme uncertain consequences. One of the first institutions that warned investors about the possible problems was the famous Goldman Sachs. They were trying to explain how such complicated situation may have a huge consequences, especially when it comes to pricing. According to the financial experts at the Goldman Sachs, sudden swings in prices, huge gaps in liquidity, and a high volatility will be the first things that will appear after Brexit. And they were right.
Just look around. Be prepared for more surprises that will definitely come after the British big Yes.