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2016 has been a difficult year in the financial markets, but one filled with plenty of opportunity for cashing in big. On this occasion of #Throwback Thursday, we look at three times you could have won your trade in 2016.

Shorting the pound on Brexit

The June 23 Brexit vote was a one-of-a-kind opportunity you rarely see in the markets. On that eventful day, the British pound plunged more than 10% against the US dollar. At its lowest, the GBP/USD was down around 12%. Very few would have guess that Britain would have voted to leave the European Union. As the votes started trickling in, traders clued in on what was happening.

If you were one of the smart ones to bet on Brexit, you could have shorted the pound for monstrous gains. easyMarkets, a CySEC and ASIC regulated broker based in Cyprus, offered a huge Trade the Brexit campaign. The firm continued to offer 1:200 leverage when many other brokers were forced to lower to 1:50 or suspend trading altogether.

By Trading S&P 500 at the bottom

You may also recall that Brexit triggered the biggest one-day stock selloff of all time.[1] The large-cap S&P 500 bottomed at 2,000.54 on June 27, the lowest since October 2015. But savvy traders knew this was a perfect time to get in on the index.

Immediately following the selloff, the S&P 500 would return to strength to set multiple record highs through the months of July and August, giving traders plenty of time to cash in. The most recent high came on August 17 at 2,186.48. That’s a nearly 200-point gain from the post-Brexit blues. Similar feats were also reached by the Dow Jones Industrial Average and Nasdaq Composite. The summer time was a great time to be longing US indexes.

By trading oil futures after rock bottom

It has been a devastating couple of years for crude oil prices, but nothing was worse than the 13-year lows of January and February. That was when US West Texas Intermediate (WTI) crashed below $27 a barrel.[2] That was, in fact, the absolute bottom. It was around that time keen investors noticed that change was afoot. Not necessarily a return to triple-digit oil prices, but at least a shift in momentum.

The following day, prices began to rebound. By mid-June, they nearly doubled.

Imagine, as a trader, seeing your crude oil position virtually double in a span of five months?! It wasn’t difficult to predict, either.

Russia and Saudi Arabia had reached a tentative agreement in February to freeze output near record levels.[3] Signs of cooperation quickly brought buyers back into the market around mid-February. In the weeks and months to follow, investors rallied behind the prospect of a global production freeze at a key meeting in Doha April 17. Although the deal never materialized, traders had the option to sell right before Doha or continue for another couple of months until $50 a barrel was in sight (conversely, they could have sold right before Doha and bought futures contracts again shortly thereafter).

For all its volatility, oil has provided plenty of opportunity for both buyers and short-sellers. It’s difficult to see a similar rally now, given that the market appears to have fizzled north of the $50 a barrel mark.

 

[1] Edward Krudy (June 26, 2016). “Post-Brexit global equity loss of over $2 trillion worst ever: S&P.” Reuters.

[2] Charles Riley (February 11, 2016). “Oil crash taking stocks down… again.” CNN Money.

[3] Mohammed Sergie, Grant Smith and Javier Blas (February 16, 2016). “Saudi Arabia, Russia to Freeze Oil Output Near Record Levels.” Bloomberg.

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