The US elections, widely acknowledged as one of the most important in recent history, were held on 5 November 2024, with President Donald Trump winning by popular vote.
The election outcomes have already begun influencing various financial markets, with the crypto market experiencing a notable surge as Bitcoin surpasses $86,000.
These results are expected to impact the global economy as financial service providers and industries adjust to the new administration’s policies. Prop traders are closely monitoring market signals to assess how these changes may affect their strategies and opportunities in the coming months.
How Elections Impact Prop Trading
Prop trading allows traders to scale their investments using capital owned by financial companies. A good example is the OANDA prop trader, which is a leading program with competitive rewards, including a high payout share, trader-friendly rules, and access to higher capital. Like traditional trading, prop trading is influenced by various factors and events, including election outcomes.
These are some potential impacts of the election results on prop trading:
Market Volatility and Trading Opportunities
Pre- and post-election markets are typically volatile as investors react to results. Pre-election volatility stems from investors buying or selling assets as they await the election outcomes. Investors gauge market reactions to candidates’ policies and stances on global and local political issues and adjust their portfolios accordingly. Markets also experience higher volumes after results are announced due to investors adjusting their positions for potential profits.
Increased market volatility presents trading opportunities that prop traders may exploit. For example, the price of Bitcoin (BTC) rose from $69,000 to $90,000 within a week of the US election, a clear display that the new president’s policies directly influence the market. Prop traders’ rising post-election volatility could make more profits than in less volatile markets.
Funding Opportunities
Higher market volatility could lead to more traders trying out prop trading, increasing the number of traders in the market and trading volumes. This presents the opportunity for prop firms to expand their reach, onboard more traders, provide more liquidity to financial markets, and potentially make more revenue from investments.
There’s high competition for professional traders, and this could make prop firms offer better incentives, such as higher profit share, lower fees, and more competitive trading conditions, such as lot sizes and spreads (for brokers offering prop trading).
Trading Diversification
The increased volatility across markets will influence portfolio diversification among traders. The stock, crypto, forex, options, retail, real estate, and other markets will see massive flows as investors adjust their portfolios to reflect market changes. As traders diversify, prop firms will adapt to accommodate potential impacts, such as higher capital flow and returns.
Impacts on Specific Sectors
Events will influence post-election markets in specific sectors. For example, more funding for sustainable development could cause massive changes in energy and gas prices, which traders could explore to make profits.
The incoming US president has promised tax cuts and more economic freedom. These promises could encourage investors to increase their financial investments and attract foreign investors to the US.
Despite political tensions in the Middle East and trade wars with China, the US Dollar (USD) is expected to remain dominant across financial markets. Increased volatility and reactions to new policies will influence demand for the USD in the coming months, driving prices higher or lower in response.
Prop firms will adjust to this by potentially allocating more funds to professional traders to invest in more rewarding markets. Regulatory changes may impact prop firms as they comply with new policies that tighten anti-money laundering requirements.
Market Predictions for the Coming Months
Analysts predict more active markets in 2025 as investors react to President Trump’s government’s policies. The new President will take office on 20 January 2025. Analysts believe the first 100 days in office will set the tone politically and economically for the next four years and will be key to shaping investor’s sentiments.
The US debt deficit requires immediate attention and could be one of the first areas to be addressed. Potential actions include reduced government expenditures and borrowing, cutting foreign aid, and decreasing funding for several unproductive commitments.
Experts also predict heightened volatility across financial markets and stable prices as foreign policies are implemented. The US kept interest rates high for most of 2024 to battle rising inflation; a potential increase in 2025 will see higher demand for stocks and the USD, which will drive prices higher.
There are also predictions that President Trump’s administration will focus on more funding for local industries as the US seeks to strengthen local productivity and increase competitiveness in global markets. Many manufacturers, such as chemical and automotive giants, are based in the US and already employ thousands. Policies that improve business conditions will see them contribute more to the US economy.
Also, increased funding for these sectors would expand job opportunities by creating more positions across various skill levels while stimulating the growth of supply chains and supporting industries, leading to a ripple effect across the economy. Additionally, expanding local manufacturing can help reduce reliance on imports, which may contribute to a stronger dollar as the trade balance improves.
Navigating Post-Election Market Dynamics
Diversification, position-sizing, stop loss (Sl) and take profit (TP) orders, patience, and speed are important for investors in the post-election markets. Trading opportunities are set to expand as markets move faster. Key sectors to watch are technology, healthcare, energy, and manufacturing. Prop firms will provide more funding for traders and adjust their products and services according to market dynamics. As always, prop traders must analyze markets for more accurate predictions and to find profitable trading opportunities.