By Rob Colville on May 12, 2015 in Trade Ideas
Regardless of whether you were rooting for David Cameron and a Tory victory, or David Milliband’s Labour party stealing the show in this year’s UK General Election (May 2015), we were able to position ourselves in the market so that we could make money regardless of who won!
(Above video: describes our 2015 General Election Hedge, outlining the technical buy set-up for GBPAUD and the sell set-up on GBPJPY)
We predicted that if the Conservatives trumped Labour, the markets would rally, sending the FTSE350 and the British Pound (GBP) upwards. After all, they are the party traditionally backed by business and commerce, and this year’s lead up to the election has proved to be no exception to the rule. However, if Labour won, we considered it very likely that we would see the reverse – with flash crash with the FTSE and GBP.
On the day of polling we had two text book set-ups, one on GBPAUD (daily buy) and the second, GBPJPY (weekly sell). Both set-ups has positive reward so that if either played out, we could have made significantly more in profit than we had risked on the trade (2% of our trading account)
With the Conservative and Labour party both neck and neck in the opinion polls, a victory for either side will guarantee us one thing in the market – movement!
Our long set-up for GBPAUD which was a trend continuation set-up would capture a potential rally in GBP is the Conservative party won, yet, our GBPJPY trend reversal sell set-up would capture the move if Ed Milliband’s party did win. This meant we could potentially make money no matter who won and which way GBP cross pairs moved. The perfect storm, thanks to the power of trade set-ups with positive reward and hedging.
A landslide Conservative victory caused our GBPAUD buy position to rally. After we were triggered into the trade, our trading account saw immediate profits as GBPAUD went to meteoric heights. The GBPJPY sell set-up, on the other hand, invalidated itself and we deleted our resting orders for a no loss outcome (please watch video above)