Senior Analyst

Passionate about the markets, the excitement, the story driving the markets at the time, the fundamentals and even the technicals.

We’ve all been on the wrong side of a trade. Up until now, we simply had to suck it up and move on. That’s until easyMarkets came out with dealCancellation, a feature that allows traders to cancel their losing position within 60 minutes for a full refund. There is a small fee for enabling the feature but it’s not comparable to what you might lose if your trade goes the wrong way. This is especially true when you consider the following examples of when dealCancellation could have saved you.

Brexit

Britain’s decision to leave the European Union on June 23 is perhaps the perfect example of when dealCancellation could have saved your bacon. The strong majority of experts, pollsters and market participants expected Britain to remain part of the single market. As it turns out, 52% of voters opted to leave, triggering the biggest stock market selloff in history.[1] It also triggered a massive selloff in the British pound, which eventually fell to 168-year lows against a basket of other major currencies.[2] A tool like dealCancellation would have been appropriate during Brexit regardless of which side of the trade you were on. Sometimes a small fee  might worth the peace of mind!

Donald Trump Election

The election of Donald Trump on November 8 shocked the global financial markets. What was perhaps more shocking was how investors reacted to the news. Stock futures were initially down on the result before mounting a massive recovery, leading to consecutive record highs for the Dow Jones Industrial Average, S&P 500 and Nasdaq Composite. But if you longed precious metals or shorted the US dollar, you got the short end of the stick. Like Brexit, the US presidential election was one of those rare events where you probably should have played dealCancellation regardless.

The Trump effect is not over yet. The President-elect will be in the spotlight next year as he rolls out his economic platform, which includes massive tax cuts, deregulation and up to $1 trillion in fiscal spending.

Deutsche Bank Fine

Back in October, the US Department of Justice fined German lender Deutsche Bank a whopping $14 billion for mis-selling mortgage-backed securities during the financial crisis. Not even dealCancellation could have saved you if you bought Deutsche shares at any time this year. The stock is down more than 30% since the start of January, having set multiple record lows in the process. But if you were longing the DAX or any other major index after the fine was announced, dealCancellation could have saved you. Mind you, the Deutsche Bank crisis evolved over time, so dealCancellation wouldn’t have helped you to the same extent as during Brexit or the US election.

Italian Referendum

In a December 4 referendum, Italians were asked if they approve of amending the constitution. A “Yes” vote would have allowed Prime Minister Matteo Renzi to revamp the Senate and make the country more governable. A “No” conclusion would have led to his resignation, likely paving the way for the populist Five Star Movement to fill the void.

The “No” vote prevailed, and Renzi immediately conceded defeat. While the market’s response was more subdued than expected, the EUR/USD pair immediately plunged to a 20-month low. Had you played dealCancellation, you could have avoided the bloodbath and re-entered the market hours later when the EUR/USD shot back up to three-week highs.

DealCancellation: Cheap Insurance

By enabling dealCancellation, traders have the peace of mind knowing they  might opt out of a bad deal within 60 minutes of placing it. The small fee attached to the feature may be thought of as “cheap insurance” during highly volatile events. Best of all, knowing the feature is available with just a few clicks may help you plan for market-moving events.

As 2016 so aptly demonstrated, volatility is here to stay. A feature like dealCancellation couldn’t have come at a more opportune time for traders looking to navigate the troubled waters.

 

[1] Matt Egan (June 28, 2016). “Brexit crash wiped out a record $3 trillion. Now what?” CNN Money.

[2] Mehreen Khan (October 12, 2016). “Pound slumps to 168-year low.” Financial Times.

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