There has been a lot of talk and deliberation over whether or not the UK will leave the European Union or not. The so-called “Brexit” has the potential to be very damaging to European stocks, and as discussion heats up this summer, we should be prepared for a weakened European market, both in stocks and the indices that represent them. Even President Obama has warned recently about the dangers that this would cause when it comes to global trade, and this is something not to be taken lightly. According to estimates, it could take as long as ten years before normal trade relations were restored between the U.S. and the UK. This would be extremely tough on both nations, England more so than the U.S., unfortunately for Britons.
Great Britain does have its own currency, as do a handful of other nations with the EU, but they are still members of this conglomerate of nations, and even if exiting the EU would be beneficial to them long term, it would have a catastrophic short term fallout. England has one of the largest economies in the EU, and they account for much of the international trade that occurs. London is one of the three biggest centers in the world when it comes to finance, making the situation even more difficult. The psychological impact that this would have on traders would be immense, and it is very likely to drive prices down far below where they should be. This could happen far beyond Europe, too.
If you will recall, the last time there were discussions about a country leaving the EU it was Greece, and this had a hugely negative impact upon the European economy. Greece has a very small economy comparatively, and with the UK making the same decision right now, there’s potential that the impact could be even bigger this year. Even if it’s decided to avoid the Brexit, the playout leading up to the decision could be rough. Right now, the decision is not as close to being voted upon as the Greece decision was last year, but if it approaches this point, be prepared for large drops in European prices. It’s also important to remember what happened in the U.S. as this was going on before. The Greece drama had a negative impact on stocks and indices in the U.S., and because the U.S. does far more business with England than it does Greece, the impact could be even worse for American assets. The global economy is all interconnected, and even though many traders feel like the U.S. is being unfairly punished because of the EU status of England, there is a connection, and reverberations throughout the market are healthy long term as they prevent overpricing. Having a method to combat this in your own trading is a must.
Most U.S. based traders are not well equipped to do this. But by using binary options, you can avoid the currency exchange fees that would otherwise be necessary, and you can profit directly from a binary options broker based upon your correct predictions on price movement. This is far easier since it avoids ownership of any sort and allows you to use your knowledge of assets and their actions to your advantage without the big capital disadvantages that smaller traders are at when trying to go short in international markets. A strategy of put options becomes far easier than traditional methods, and they are far cheaper for traders with accounts of less than $100,000. Most people fall into this category, and that makes the decision making process much easier when it comes to keep costs down.