Trading Midterm Elections – The Complete Playbook

The United States midterm elections are taking place on November 6th.

Stock markets will make massive moves to price in midterm elections ultimate outcome.

I am going to share my ideas on how to take advantage of this massive opportunity as a trader.


Midterm Elections – Donald Trump’s Promises Before Recess

Government is now in recess and preparing for the midterm elections.

On October 20th Donald Trump promised Americans a second round of tax cuts.  This one is gonna benefit the average income American.

However, Republican law makers are saying they have not heard anything about this plan.

So is this an attempt by the president to win over some last minute voters?

Absolutely.  Trump knows how to build buzz and at this point he needs to rally all his supporters.

According to a collection of numerous poll sources by – Donald Trump currently has a 52.9% disapproval rating.

Donald Trump Approval Ratings

Donald Trump Approval Ratings


Tax cuts are pushing the 2018 deficit to nearly $1 trillion dollars – the highest since 2011.

Truth is, there simply is no more room for more tax cuts.

In fact, there is not enough room for the last round of tax cuts.


Midterm Elections – What Needs to Happen for Democrats to Win?

Currently the House and Senate are Republican controlled.

This gives Donald Trump big power to push through legislation with his party on board.

In order for the Democrats to win a majority, they will need to keep the 194 seats currently held and add at least 24 Republican seats.

Therefore Democrats need a total of 218 seats to win a majority and flip from Republican control.

Overall, there is currently a total of 25 Republican held districts where Hillary Clinton beat Donald Trump in 2016.

One thing you should have clearly learned by now with Brexit and the 2016 elections is that anything is possible.

At this time, some media outlets are projecting a 65% probability, to as high as 80%, of Democrats taking at least the House or Senate.

But what were the projected odds of Trump becoming president elect?

Nothing is given, nothing is certain until the tally becomes official.

This brings me to something I absolutely must tell you well ahead of time.

Before I jump into that, let’s clarify the two different battles between the Senate and the House.


Midterm Elections – The Battle for the House and Senate in Visuals

There are two separate battles taking place during the midterm elections.

First is the House of representatives, where 218 seats are needed for control.


Midterm Elections – The Battle for the House Seats


Second, the battle for the Senate requires a total of 51 seats for control.  Democrats have a solid head start here, with 14 seats.

Republicans have only 3 solid seats, and will need to win over a big portion of the uncontested vote.

Midterm Elections - The Battle for the Senate Seats

Midterm Elections – The Battle for the Senate Seats


Midterm Elections – Keep Political Beliefs and YOUR Investment Separate

Be careful making investment decisions on the back of what supports your political beliefs.

You can be a Democrat hoping to sweep the election, or a Republican hoping to maintain control.  You can be anything in between.

But I have to caution you NOT TO invest in what you want to happen.

The Market doesn’t care about what you want, it only prices in what is factual now and the implications of that data in the future.

Learn more about trading psychology in our ELITE membership bundle.

So what is the likely reaction by the stock market to the various midterm elections scenarios?


Midterm Elections – What are the Scenarios and Market Impact?

Here is a list of the three likely election results and the implications of both policy and the stock market.

Midterm Elections Predictions and Stock Market Reaction

Source: ING – Midterm Elections Predictions and Stock Market Reaction


At this time the probability of each scenario is as follows:

  1. Trump Unbound – medium probability
  2. Trump Tapered – high probability
  3. Grand Bargain – low probability
  4. All-out War in DC – medium probability

I am of the personal opinion that every outcome will create significant market volatility.

The least volatile outcome will be if Republicans can keep majority in House and Senate, as this would be status quo up to this point.  Under this scenario, you will see a spike of buyers as institutional traders jump back in to benefit from two more years of market positive policy.

In the event of a Democratic sweep, you will see unpredictable and immense volatility as markets fight to reprice a future full of uncertainty.

Anyone who is telling you they know the outcome, and how the market will react is kidding themselves and you.

You will have to wait until election night to see how it all unfolds.

One thing is for certain however, there will be amazing opportunity for traders.


Midterm Elections – What Markets to Trade During Polling

Most markets globally will be moving on midterm elections day.

Here are the markets where there is heavy institutional trading volume:

  1. SP500 Index Futures – ES
  2. US 30 Year Bond Futures – ZB
  3. Dollar Index (US) – DX
  4. Gold Futures – GC
  5. Japanese Yen Futures – 6J (or USD/JPY spot market)

Because stock markets close at 8PM EST officially, you will not be able to take advantage of market moves using stocks and ETFs.

You can trade futures or forex (currencies) to take advantage of the volatility on midterm elections.


Midterm Elections – Imagine Trading in a Proprietary Floor for this Event?

What if you could trade on a team of professional traders?

Imagine what this would do to your confidence, and more importantly your potential?

On election night I will be trading with our ELITE subscriber team live, from 7PM EST until the wee hours of the morning.

Every trader at institutionas around the world will be trading this event live.

Europe, Asia, North America – traders will be up through the night to use the volatility for speculation or hedging.

Will you be trading with the smart money or against it?


Join our ELITE membership package and get access to the midterm elections trading room.

Good luck and good trading.



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The information contained in this post is solely for educational purposes, and does not constitute investment advice. The risk of trading in securities markets can be substantial. You should carefully consider if engaging in such activity is suitable to your own financial situation. TRADEPRO Academy is not responsible for any liabilities arising as a result of your market involvement or individual trade activities.