Election results often arrive during the night in European time, when FX liquidity is at its lowest. That combination makes election nights some of the riskiest periods for open positions.
What to expect:
Results trickle in over hours, with exit polls and early counts producing several moves.
Spreads widen sharply, especially on the affected currency's crosses.
Moves can overshoot and partially reverse once Asia and later Europe trade the result.
Approaches:
Close or reduce positions in affected currencies before polls close.
If holding, use smaller size and wider stops, accepting possible slippage.
Wait for the outcome to be clear and liquidity to return before entering new trades.
For prop accounts, check whether the firm treats major elections as restricted events.
How do you handle positions around elections in currencies you trade?
Not every election lands mid week. French, Japanese and many other votes happen on a Sunday, so the result arrives while the market is shut and the risk is a Monday open gap rather than thin overnight trading.
For those I size as if the stop does not exist. A stop 30 pips away does nothing if EURUSD opens 80 pips lower on Sunday evening, with the first prices coming from a few banks in Wellington and Sydney.
The UK is the clean mid week case. Polls close at 22:00 London, the exit poll comes straight away, and the first big moves in sterling usually follow within minutes, long before most constituencies declare.
I learned to respect the overshoot after the 2016 referendum. Cable traded near 1.50 when early results came in and was close to 1.32 a few hours later, with spreads at levels I had never seen on that pair.
For prop accounts the weekend rule is the one to check. Some funded accounts must be flat on Friday anyway, which removes the Sunday problem but makes the Friday close matter more.
Do you trade the morning after once liquidity is back? I find the second session after a surprise result cleaner than the first.
