30 June, AtoZForex – A week ago millions of Britons voted for the UK to leave the EU. As a consequence, the worst GBP performance was recorded last Friday. In the Brexit aftermath, the financial markets remains chaotic, if you assess it from the market movement perspective. Thus, this has triggered the concerns of many traders about their brokers. In response, AtoZForex has reached out to Vantage FX for their opinion.
In an interview with Dane Williams, Market Analyst at Vantage FX, more clarity has been provided upon Post Brexit Vantage FX operations.
Q1: What was the biggest achievement for Vantage FX throughout the Brexit vote?
– The robust risk management measures taken in the lead up to the Brexit referendum saw Vantage FX, and most importantly our clients, safely through the biggest financial market shock since the infamous Black Monday of 1987!
In my opinion, broker risk management principles shouldn’t be seen as an ‘achievement’ as such, but rather business as usual.
Q2: Which risk management precaution did Vantage FX take?
– Vantage FX takes risk management very seriously and we were not going to take any chances around the Brexit vote for the sake of a short term marketing gimmick.
With the leave vote unexpectedly winning and market liquidity drying up, our decision to limit many affected forex currency pairs to ‘close only’ and increase margin requirements in the lead up proved to be the correct call.
Q3: How did Vantage FX’s MT4 platform react as the Brexit news hit the market? Did you face any lack of liquidity?
– As expected, ECN liquidity throughout both the vote and fallout was thin. However, our clients were kept up to date with consistent communication and analysis, while the risk management procedures implemented above meant the effects haven’t been game changingly negative for anyone on our book.
As things have settled down, the liquidity we receive from our LP’s has returned to normal levels and our margin requirements have been adjusted accordingly.
Q4: Are you able to share any insights about your client’s operations? Can you share average lot size entered for GBPUSD and average profit loss for this pair?
– Alongside the limitations we placed, traders on the Vantage FX book were actually very risk averse anyway. It’s not like we faced some of the complaints that you may have seen floating around on social media heading into the release, where all some traders wanted to do (and were actually being encouraged), was gamble on the decision.
Trading volumes in GBP related pairs are starting to pick up now, highlighting the opportunities we see for savvy traders to take advantage of any overreaction or panic in market sentiment now that the result is known.
Q5: What is the most traded instrument for Vantage FX at the moment?
– Not surprisingly we are seeing a lot of action in GBP but it’s focused on the currency crosses such as GBP/JPY, GBP/AUD and GBP/CAD.
The other big market that we’re seeing a lot of volume going through is GOLD. We all see and read about the uncertain nature of how the UK now goes about leaving the EU, and a lot of Vantage FX traders are playing on that uncertainty with GOLD longs.
Q6: What are your expectations heading forward? How will the EU leaders react to Brexit?
– ‘Brexit’ from the EU isn’t an overnight process. Prime Minister David Cameron has resigned in order to pave the way for a new leader to take the UK to the next step following the vote. But… Cameron won’t actually leave until October, and only then can the TWO YEAR process of officially leaving even begin. There’s a long way to go yet!
All that means for markets, traders and people in the UK is uncertainty. So ‘settling back into regular trading conditions’ might not be a short term proposition. All we can do now is wait and see.
Q7: Do you have any recommendations for traders?
– While there’s still a long way to go, things are most definitely going to settle down sooner rather than later. It’s only been a week and markets are already looking forward to the next market mover, that being what the US Federal Reserve is going to now do with rates.
My recommendation, as always, is to try and consider in which direction the market has overpriced an event, and then use obvious technical levels to manage your risk around in the opposite direction.
Thank you for your time and input, Dane Williams. We are happy to deliver the news about brokers’ performance after the recent historic trading day, where AtoZForex followers have been able to stay on top of the market news.
Through this interview, Vantage FX has been able to provide the public more clarity about their operations, performance and risk management activities in the last 48 hours. If you are curious about the current situation of the other brokers and their opinion of the current market, please check AtoZForex’s list of Forex Brokers Post Brexit operations and risk management activities.
Do you have more questions for Vantage FX? Don’t hesitate to post the question in the comment section below.