Here's Your Ultimate Trading Guide For The 2024 US Election

The Forex Analytix team have put together a comprehensive preview of trading through the US elections

Special events need special analysis so here's several members of the Forex Analytix team detailing their view of the US election and how to trade it.

Blake Morrow

@pipczar

Election Run-up:

As we approach the 2024 U.S. elections, certain asset classes have shown notable movement. Bitcoin has surged past the $70K mark, USDMXN is approaching a potential breakout above 20.00, with yearly highs at 20.23, and stock markets remain near all-time highs. This price action seems driven by growing expectations that former President Trump will secure a second term on November 5th. Betting markets continue to raise the odds of a Trump victory as we get closer to Election Day.

Election Day Reactions:

The best historical comparison for the 2024 election is the 2016 contest between Trump and Clinton. If Trump wins again, we might see a similar reaction across markets, particularly in the U.S. Dollar and equities. However, there's the potential for a classic "buy the rumor, sell the news" scenario if Trump emerges victorious.

I anticipate that stocks could rally regardless of the Congressional makeup, but a "red wave" would likely trigger a more significant surge in both equities and the U.S. Dollar. Despite this, the stock market could encounter sellers in the hours or days following the election. The U.S. Dollar might sustain its gains, bolstered by expectations of tariffs (which tend to support the Dollar), with risk aversion in equities possibly contributing to further Dollar strength even after a stock market pullback.

In contrast, a Harris win would likely result in an immediate downside reaction in both equities and the U.S. Dollar. It's also probable that a Harris victory would be contested, and the longer the contestation drags on, the more intense any sustained sell-off in equities could become, with the Dollar eventually reversing course.

Final Thoughts:

These are broad strokes, of course. Some currencies may perform better in Dollar-related pairs, and it's important to avoid a "one size fits all" approach when dealing with the U.S. Dollar. Election night and the days following are likely to be highly volatile, so managing position sizes carefully will be crucial.

Good luck out there, and we'll see you in the Forex Analytix chatrooms to break it all down in real time on election night and beyond!

Stelios Kontogoulas

@SteliosConto

I think that for the first time in many years, a Democrat or Republican win could have a big impact on markets. 

It's becoming clear to me that a Harris win will effectively continue the status quo of the previous administration. On the other hand, a Trump win will likely shake things up in many ways:

• A much stricter approach to the US borders and immigration
• Aggressive tariffs
• Elon Musk likely in charge of optimizing / cutting government spending, with a $2 trillion per year reduction target

It's my view that a Trump win will have a deflationary effect – at least in the short term – while a Harris win will have the opposite.

In the event of a Harris win, I think that the US Dollar will come under pressure and risk assets will rally, while cryptos may underperform as the Democrats are not as crypto-friendly as Republicans.

Betting markets (and markets in general) have been pointing towards a Trump win, and I think that this is premature. On a risk/reward basis it probably makes sense to take the opposite view here, as I expect Harris to close the gap in the days ahead of the elections. If you ask me who i think will win, I'll go with Harris.

Good luck!

Koen Vanderschrick

@KVanderschrick

The markets are clearly front running a Trump victory, which has translated into a higher USD, lower bonds but higher selective equities, gold, silver as inflation trades and crypto which is all according to what Trump would put in place if he can pull a Red sweep off. Currencies such as especially MXN but also CAD where he would call for a revision of the USMCA deal, have been under pressure.

If he'd pull it off we could first see a continuation with a few quite violent sessions in the same directions. But…I am not a believer in the fact that protectionism, more tariffs, ramping up import costs to build, buy America will have a lasting positive US effect. Where the bond markets may continue to trade the inflation weight, I can see the USD turn around after a while and drop back vs ex-EM currencies especially. The fate of MXN and CAD may be more uncertain, depending on USMCA. Gold should remain very bid for longer as the tariffed, especially Asians will continue to buy.

If, and that would according to the polls be a relative surprise, Harris would get in, a fair bit of what we've seen in the build up should be undone at first. EM recover part, if not all, losses, USD giving back gains, equity markets correct as well as bonds and metals. But, depending on the composition of congress, the political continuation should steady the markets after a while, the USD recover if the economy holds up. Bonds will likely stay heavy after a round of short covering with increased fiscal needs.

I expect big moves with the blue ripples to calm faster than red ones. A Trump sweep would mean years of very sporty markets.

Nick Groves

@TradingAnalytix

Pre-Election: Pre-Election thoughts? In the famous words of Ryan Littlestone: "Watch your levels". What are those levels? For me SPX – Support:5700, 5590. Resistance: 5810, 5880. DOW – Support: 41,510, 40,950 Resistance: 42,705, 43,350. DXY – Support: 103.20 Resistance: 105.50. Equities this week slumped roughly -1.5% (SPX/Nasdaq) leading into election week. The 2024 market has not acted in tandem with previous election years, as we typically begin to see a sell-off in Late September carried through/bottoming in October.

This past week was the first bearish weekly candle in roughly 2 months. I believe the support levels listed above for S&P are crucial and need to be held for those expecting a rally. But given Volatility on the rise, Liquidity drying up, and overall high emotions for next week it would not surprise me to have these support levels taken out. With such recent strength and the lack of selling in the last few months, we may see the market catch up with seasonality and show a slight correction before a rally. By slight I mean a healthy 5-8% correction off All Time highs.

Historically speaking, the market does tend to rally following an election which I am expecting (after a slight correction). That type of move makes you wonder where that puts the Dollar which has already rallied 4% the last few weeks. Fun Times! I think this is adding up for ample trading opportunities. Be careful on trusting moves with Vol on the rise, expect the unexpected, and above all else keep your popcorn ready!

Post-Election: I believe there is a sense that the outcome of the 2024 US Presidential Election will decide whether the US Stock Market will remain healthy or not. While policies that the next President puts forth will certainly impact the economy, I feel that 3-4 weeks from now we will simply be data dependent again. We cannot get caught up in too much political drama. Let's remember, we have begun a FED cut cycle, and the market runs off of FED narrative. We just experienced the lowest NFP print since 2020, and as much as I'd like to feel warm and fuzzy about either President Elect, the next president elect is walking into a tough situation following the actions from the Pandemic. Granted, all of this takes time to play out.

I think there will be great opportunities to seize following this election after price action calms because of how far certain market have already ran. For example, in the event President Trump is elected, I believe the Dollar will rally. His policy on Tariffs likely causes Dollar demand, but this comes after a +4% increase in the DXY since Late September. If we see another 1-2% pop higher in the Dollar after Dollar Bears have already felt castrated this Fall, there will likely be an opportunity for Bears as price action could simply run too far from expectations. I'd be searching for short opportunities as FED Cut cycles poorly favor the Dollar. Essentially, the market is likely to give us some exceptional levels to trade off of given how far the Dollar, Gold, Yields, etc have already overstretched. I plan to exploit the price discrepancies as reality rejoins the conversation.

Ryan Littlestone

@forexflowlive

Even for a Brit, it's hard not to get caught up in the fanfare of the US election. The two runners are more like celebrities, the election more like a gameshow. At the end of the day though, as traders, we have to remove ourselves from the excitement to concentrate on the trading outcomes. It was no different to the UK election. I have my political views but they will never influence my trading, and that's something that might be very hard for US traders to do. So, my first piece of advice to US traders is to not let this emotive event impact your trading discipline. Trade with your head, not with your heart.

For me, there's so many trading variables that for my own sanity, I'm going to try and reduce it all down to two main timeframes. What happens on the election and then what the longer-term ramifications are.

Short-term

Firstly, the actual election, and again, I want to try and keep things simple. 

A Harris win is pretty much keeping the status quo, so if that happens, I think we return very quickly to trading the economy and what the Fed are up to. For markets, it's the path of least future risk.

A Trump win is the messier outcome. It potentially means more protectionist measures. It means more policy uncertainty.

Considering we've been "trading Trump" somewhat, there's obviously two possible moves here. A reversal of said Trump trade if Harris wins, and a confirmation trade if Trump wins. I see a Trump win reverberating in the market longer than a Harris win. 

Obviously, there's the "House " situation too and whether there's clean sweeps etc. But that's something we can only look at when it happens but generally, the market wants certainty so a majority for the new president's party is the most market favourable. 

Longer-term

A Trump win will again be the bigger market mover, in my opinion. We'll have to watch things like the USMCA being re-negotiated as well as tariffs and trade fights with many other countries (China being the biggest). MAGA might be seen as US positive initially but if it becomes too internationally restrictive, then that will impact trade and may become a negative for US exports. Obvious currencies like CAD, MXN and CNY(H) will be front and centre of that news but stocks will take note too. Big firms are not just country specific now and the majority of the biggest US companies operate globally, so their share prices may be at risk if protectionist measures are too harsh on their international businesses.

We can't overlook the non-trade geopolitical risks too. We have the Middle East conflict, the Ukraine conflict and what that means once again for the US playing and paying it's part in NATO, and then relations with Russia and by proxy, China. Maybe this time Trump can win the Nobel Peace prize for bringing resolutions to those situations, as he's promised.

There's a million other situations that may develop from these elections and we can't plan trades for them all so if you find you are getting lost in the noise, simply revert back to what's actually happening in the economy and what it means for the Fed. The economics doesn't stop because of the election, and neither will markets. Politics comes in fits and spurts but the fundamentals are there to be traded everyday.

Trade well.

And there you have it ladies and gents. A lot of great thoughts and analysis. Good luck this week and position size accordingly for high volatility.

The Forex Analytix team