Traders are preparing for chaos on election day. With the U.S. elections causing market turbulence, many trading platforms have warned users that they may face trading interruptions on Tuesday.
eToro warned that extreme conditions could trigger circuit breakers. One of Europe's largest day trading apps, Trading 212, reminds users that some trading venues may implement temporary trading halts to stabilize the market.
London-based trading platform Freetrade also plans to send users warnings about expected volatility.
Some companies warned that because voting in some states will not conclude until Tuesday evening in New York, volatility is likely to spill over into overnight trading and continue throughout Wednesday's trading day.
Following that, both the Federal Reserve and the Bank of England are preparing to announce interest rates on Thursday, and the market must brace for another surprise (or shock).
Freetrade spokesperson Alexander Campbell said, "Investors should be mentally prepared for significant fluctuations in the market and may encounter difficulties in executing trades. It is crucial for retail investors caught in the whirlpool of geopolitical and economic turmoil to stick to their investment strategies."
However, according to two people working at trading firms, such warnings are typically standard cautionary statements issued by brokers in anticipation of volatility. They said that these market-making companies have not seen any severe trading disruptions at the moment, but they requested not to disclose their identities when discussing this information publicly.
Charles Schwab Corp. and Interactive Brokers Group Inc. both stated that they have not issued any warning messages.
A spokesperson for Interactive Brokers, based in Greenwich, Connecticut, said, "We do not expect any problems at this time. We are seeing high trading volumes at the exchanges, with today's contracts related to the presidential election exceeding 50 million."
The rise of commission-free trading apps has made a new class of day traders a significant force in global markets. For example, in the booming zero-day stock options space, retail investors account for more than a quarter of the trading volume.
Article reposted from: Jin10 Data