The Election Impact

An upcoming election always raises questions about how the economy will respond. Even a midterm election has an impact, and this year is no different. Instead of a President, though, this year’s focus is on just a few key U.S. Senate seats that are up for grabs.

As a general rule, when there is a degree of uncertainty in an upcoming election, stocks respond by dropping in price. The more important the election, or the more severe the uncertainty, the more negatively stocks will tend to respond. That may be part of the reason why the last few weeks have been so chaotic on Wall Street. There are obviously a lot of other factors at play here, but this fact has definitely not helped the situation. Luckily, resolution is coming soon to this election and at least a tiny bit of normalcy will be restored.

Some election outcomes are predicted to be better than others. Theoretically, Republicans tend to be more in favor of big business (read: raising stock prices) than Democrats, so you would think that Republican victories would be the best thing for the stock markets. In reality, right now, the best result is just to be done with the elections so that investors can take a final inventory of where things lie and then prepare to move forward. It’s very difficult to plan if there is a big decision up ahead that still needs to be made. Guessing is only so good of a solution; having the final information is always better when it comes to preparing your trades for the future.

Short term trading--especially those types that give you access to down trades and short sales--is a strong alternative to investing in these situations. Investors are staying out of the market at full strength right now because there’s no point in buying low and selling even lower. But if you have access to the ability to profit when prices drop, you have no reason to worry right now. This is where day traders with tons of money gain an advantage. But if you don’t have the $100,000 or so to make this worthwhile for you, there are other choices. Binary options are the best choice right now if you are not comfortable with other types of trading, such as trading on the Forex market. These allow you to invest tiny bits at a time--usually around $25 per trade--and still profit when prices drop. They often have returns of around 80 percent on the trade. For a $25 trade, that would give you $20 back in returns.

Right now, there are two races that are way too close to predict. One of these is in Georgia and the other is in Louisiana. These are not major states when it comes to the economy, but the balance of the Senate is so tight right now, that either of these could change it from a Democratic majority to a Republican, which would have a major influence on which way the economy goes in the future. Watching polls in these states could give you a better idea of what’s going to happen this election season and give you a slight advantage over other traders, or you can just keep your money out of the market until the answer is clear and avoid risk altogether. Both have benefits, but no risk also means no chance at profits. As long as your risk is managed and not too great, it is a tool that you can use to increase your personal wealth. Trading binaries in small amounts is a good way to accomplish this.