According to Adam Jepsen, the founder of FinancialSpreads.com, “It is important to remember that from a ‘pure risk’ point of view, most of us have an inherent trade on the referendum.”
“Irrespective of any personal views, there is a financial risk.”
Financial Spreads, has already written to clients warning them of the difficulty of trading the potentially extreme volatility.
The company has also temporarily increased margins, i.e. increased the funds that clients need to deposit in order to trade.
Jepsen explained the risk, “Put simply, the bookmakers suggest there is a 70% chance the UK will ‘Remain’ and a 35% chance that the UK will ‘Leave’ the European Union. (The extra 5% is the bookmakers’ profit margin).
“The UK leaving the EU may not result in Great Depression II that George Osborne has forecast. Having said that, there are many predicting a prolonged downturn if the UK does vote to Leave.
“If, for the sake of argument, there’s a 35% chance the UK will Leave and a 30% chance of the doomsayers being correct then there’s currently a 10% of a prolonged downturn”.
“That’s a big percentage and an inherent trade.
“In a way, it doesn’t matter if there’s a 10%, 30% or 50% chance of the doomsayers being correct.
“What we are tying to remind investors of is that there is a risk of:
“a) The UK voting to leave, and
“Therefore there is a risk on the table.”
Spread trading, CFDs and margined forex trading are leveraged products which carry a high level of risk to ones capital. It is possible to lose more than ones initial deposit so investors should ensure spread trading, CFDs and margined forex meet their investment objectives and, if necessary, seek independent advice.
About Financial Spreads
Investors can use the Financial Spreads mobile apps and website to trade more than 1,000 financial markets including the key US, UK and European stock markets.
Investors can also access a range of FX markets and commodities futures 24 hours a day from 10pm Sunday evening through to 10pm Friday evening (local London time).
Financial Spreads is a trading name of Clear Investor Ltd. which is an appointed representative of FINSA Europe Ltd., company no: 07073413. FINSA Europe Ltd. is authorised and regulated by the Financial Conduct Authority, registered number 525164.
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