The U.S. Elections 2024: A Major Factor Moving Financial Markets, Market Reactions, How To Read The Market Signals & Manage Risk Like a Pro 🚨

The U.S. 2024 Elections on Global Financial Markets:

Overview:

As of September 2024, the U.S. elections have entered a critical stage, with Vice President Kamala Harris now leading the Democratic ticket following President Joe Biden's withdrawal. The Republican race is also shaping up, with former President Donald Trump. Key issues include inflation, healthcare, immigration, trade and foreign policy, Emergent Technology regulations and abortion rights. The outcome will have a profound impact on domestic policies, foreign relations, and the economy. Control of both the House and Senate remains fiercely contested.For this blog, we will solely focus on trade & foreign policies and how to manage risks arising from this.

Trade and Foreign Policy:

• Global Trade: Trade relations with key partners like China, the European Union, and Mexico are a significant concern in elections. Under the Trump administration, trade wars and tariffs created uncertainty for companies with global supply chains. A Democratic administration might adopt a more diplomatic approach, reducing trade tensions, while a Republican administration could continue pursuing protectionist policies.
• Geopolitical Tensions: U.S. foreign policy, particularly relations with countries like Russia, China, and Middle Eastern nations, can have substantial effects on financial markets. A more isolationist or interventionist foreign policy could increase volatility in global markets, with Bitcoin reaching all time highs following the war in Gaza and Lebanon
• Market Impact: Trade policies affect global supply chains, currency valuations, and commodities. Tariffs and protectionist measures tend to negatively impact multinational companies and industries reliant on imports (e.g., manufacturing), while more open trade policies could benefit these sector. The war in Ukraine notably affected global oil markets and raised oil prices from around 50 cents to over $1 per liter.

How To Manage Risk Like A Pro:

1/ You Can't Beat The Market

📊 Everything is priced in and so an Understanding that What Moves Markets are driven by a combination of fundamental, technical, and behavioral factors is essential. Key drivers include:

• Macroeconomic data like GDP growth, inflation rates, and employment figures.
• Monetary policy changes such as interest rate adjustments by central banks.
• Geopolitical events that cause uncertainty and volatility.
• Market sentiment, which can amplify price movements due to fear or greed (think FOMO vs. panic selling).

Positioning your portfolio to Ride The Bull or Bear cycle is a better strategy than trying to beat a constantly evolving market.

2/ 🔎 Breaking Down Market Trends Trend analysis is essential. I rely on a top-down approach:

• Start with the global economy, then zoom into specific sectors.
• I use tools like moving averages (MACD) and RSI (Relative Strength Index) to gauge momentum.
• Candle Tickers charts are a good way to gauge price momentum for Buyers and Sellers.
• I also analyze historical price patterns for signals on possible reversals or breakouts.

3/ 🔐 Risk Management – The Real Secret Sauce In volatile markets, it’s easy to get caught up in the highs and lows. Protecting capital is key. Here's how I approach risk:

• Position sizing: I never risk more than 1-2% of my portfolio on a single trade. This limits losses and preserves capital.
• Stop-loss orders: I use trailing stops to lock in gains while allowing for upward movement.
• Diversification: By spreading risk across asset classes, I reduce exposure to any single market event.

4/ ⚖️ The Balance Between Risk & Reward A balanced portfolio with a blend of high-risk and lower-risk assets is essential. I always ensure my risk-reward ratio is favorable — aiming for a ratio of at least 1:3. This means for every $1 risked, I aim for a $3 reward, ensuring that the wins outweigh the losses in the long run.

5/ 📈 Using Data to Stay Ahead

• I stay on top of the latest economic reports and earnings season data to spot shifts before the market reacts.
• Utilizing machine learning algorithms helps me analyze large datasets quickly and identify patterns others might miss.
• Custom Trading Bots hosted locally and on Cloud Servers regularly checking for price arbitrage between different Crypto Exchanges

6/ 🚨 Managing Psychological Risk The markets can be emotional. To succeed, I stay disciplined:

• I follow a trading plan to avoid emotional decision-making.
• Mindfulness techniques help me maintain calm under pressure, keeping me focused on long-term goals, not short-term fluctuations.

7/ 📅 Risk Scenario Planning I regularly run stress tests on my portfolio:

• What happens if inflation spikes? 📉
• What if there's a sudden market correction? 📉
• By modeling these outcomes, I stay prepared and can adjust my strategy swiftly.

8/ 🛡️ Adaptability & Continuous Learning Markets are constantly evolving. :

• Adapt strategies based on changing market conditions.
• Continuously educate myself through webinars, market analysis reports, and economic news.
• Learn from both my wins and losses to improve future performance.

9/ 🚀 Final Takeaway To move the markets, you need both data-driven insight and a clear understanding of the emotional dynamics at play. And while gains are important, risk management ensures that you stay in the game long enough to enjoy them.

🔑 Master the markets, but above all, master risk.

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