The making of dealCancellation

26-Nov-2018

28 September 2016

easyMarkets recently launched a first for the online trading industry with a new and innovative product that allows traders to cancel losing deals up to 60 minutes of opening. As a broker that makes money on the spread of trades, how and why would it develop such a tool? We’re speaking to some of the key players in the conception and development behind dealCancellation to find out why.

Nikos Antoniades – CEO

How did the idea for dealCancellation come around?

We’ve been in the industry for a long time which has given us some keen insights into traders and potential traders’ minds. The idea came out of our client relationship team that saw a lot of new people wanting to try trading but the fear of loss was keeping them from getting started. More seasoned traders know that loss is part of the game, the point is to win more. But for new people starting out that can be a daunting prospect. dealCancellation takes the fear out of losing. You are charged a small premium at the start so you know what your deal is costing you but for this fee you have the peace of mind to know that if it’s losing you can cancel it up to an hour and get your invested funds back into your trading account.

Markos Solomou - CMO

What did you think when you first heard about it?

I loved it. dealCancellation is core to easyMarket’s DNA – it’s innovative and trader-focused. It was the perfect tool to launch with our new platform which aims to be the best risk management platform in the industry. And with fixed spreads, free guaranteed stop loss and negative balance protection, I think that’s just what we’ve got.

How do you as a company get a tool like this developed?

Once the concept was presented, it was examined from all business angles – does it fit with our core values, does it give real benefit to our clients, can we do it from a technical perspective, does it make sense cost-wise? Once you tick off these boxes you need to get internal buy in and that comes from a lot of talking, sharing, shaping and healthy argument. Then you need to come out with a product that traders will want which meant simplify, simplify, simplify – understand what it is that you have; a tool that means you can cancel a losing deal and keep your profitable ones running.

What were the challenges in developing it?

Getting the pricing right was a challenge. We needed to price it in a way that was fair to our clients but also kept the company safe. Our fantastic risk management team are on it 24/7 – they ensure a fair and consistent price to the trader while ensuring the company is not exposed to risk.

What changed while you were developing it?

At first we looked at the possibility of dealCancellation being offered for up to a day but it turned out to be costly to the customer and since most of our traders are day traders, an hour reflects the excitement they’re looking for in their trading. Another thing that came in our discussions was what happens if someone hits their stop-loss while they were still under the 60-minute dealCancellation window – we decided that the client would still get their money back. Many of the details changed along the way, the pricing, the name – but what stayed the same was the easy-to-understand concept that a trader can cancel a losing deal and get their money back.

Nikolas Xenofontos – Director of Risk

How does the company manage the risk of dealCancellation when the markets are volatile?

99% of the time the pricing is based on recent historical volatility which is backward looking. With large upcoming events that may cause volatility like the NFP, historical volatility doesn’t capture what might happen so we do forward looking, manual calculation. We base this on a very short-dated option with the Delta and Gamma in mind.

Nikolas Shamtanis – Chief Relationship Manager

What will more experienced traders get from this tool?

There is always something new to learn from the markets and experienced traders know this. They have survived in the markets as they’ve learnt to manage their risks but perhaps they’ve also traded a bit conservatively – with smaller amounts or sitting out the big news events that offer up great opportunities. dealCancellation allows these pros to step up their game and make larger deal sizes on trades they feel confident on but with the pull-the-chord safety that dealCancellation has to offer.

Anthony Pottamitis – Product Manager

What were the key challenges for the technical team?

This was a new product that is a first for the industry. We needed to transverse complex technical constraints thrown up by a fast-moving market along with security and regulatory requirements. And essentially offer an affordable and exciting tool that people would want to use.

The actual implementation into our platform didn’t take long. One of the advantages of having our own proprietary platform is that we can do what we like with it.