The last couple of weeks have been incredibly exciting for us traders, but as you know, with market volatility come great opportunities as well as great risks.
Before the excitement continues with the upcoming ECB announcement, we thought we’d give you a few pointers on what you can expect to happen, so you can protect your investment accordingly. Please read the information detailed below carefully.
Note: it is your responsibility to monitor your position(s) in the market and assess your risk. If you are using leverage, be aware that your trades may close, you could lose more than your initial investment and this may significantly reduce your remaining account balance.
1. On Thursday January 22nd, at 12:45 PM GMT, the ECB will announce their interest rate decision. This announcement will be followed by a press conference with ECB President Mario Draghi 45 minutes later at 13:30 PM GMT.
2. Investors around the world are closely watching the EURO and some dramatic statements are expected to be released by ECB President Mario Draghi.
3. Some analysts predict that the EURO could move hundreds of pips in either direction depending on what ECB President Mario Draghi will announce. We generally recommend that in volatile times you activate the responsible trading mode on our platform, keeping your leverage to a maximum of 1:50 and allocating no more than 20% of your account equity to any one specific trade.
4. If you hold any EURO positions, they could be at risk as you may not have time to adjust the Stop Loss and maintain the margin. If you plan on holding your position(s), you should strongly consider reducing your leverage by adding money and adjusting your Stop Loss.
5. As the press conference is an ongoing event and not a short release of new information (unlike the NFP for example), the market in general may move in a very volatile way in both directions and we may see major price gaps on a variety of instruments for the remainder of the trading day.
6. In the event of market gaps, you could lose more than your initial investment and your remaining account balance might be significantly reduced or even go into the negative, and may force closing other open positions to cover the negative balance.
7. In cases of extreme volatility, our spreads might widen and due to limited liquidity, trading and execution may not be available at certain times.
8. If you do choose to trade during this event, be aware that there could be significant price movements and trades could open at a different rate than what you see on our platform. The same applies to pending market orders.
9. Please note that effective immediately, as we approach this event, we will temporarily limit the use of leverage on all FX pairs to a maximum of 1:100, this limitation applies to pending orders as well.
10. Please note that effective immediately, as we approach this event, we will also temporarily limit the use of leverage on all Commodities & Indices pairs to 1:50, this limitation applies to pending orders as well.
11. Be aware, this event could also impact all other markets not directly related to the EURO (currency pairs/indices/commodities).
12. As always, there is no way to predict how the market will react and there is the possibility that ECB President Mario Draghi’s announcement is already fully priced in the market, in which case we will not see any special movements.
We wish you safe and successful trading!