Political events
Political events (such as presidential elections, wars, global treaties and declarations, and so on) also affect the markets, and the price behavior before and soon after such an event is somewhat similar to that of a reaction to regular economic news. This isn’t surprising because the mechanics behind the scenes is the same – everyone knows that this is a major event, no one wants to take excessive risk, liquidity providers withdraw liquidity from the books, and any new order, even small in size, can momentarily drive the price anywhere.
The difference between political and regular economic events is probably in the duration of the price movement after the event. Let’s consider a couple of examples.
US presidential elections, November 8, 2016
On this day, Donald Trump was elected the President of the US. His victory was not smooth: he was only the fifth president who lost the popular vote but was nevertheless elected. Therefore, if we...
