Greece Fallout Impacts Global Traders

Germany's DAX opens with large gap surprising traders

Europe woke up this morning to the anticipated bank closures in Greece finally becoming a reality. The 3am announcement saw capital controls imposed banning payments and international transfers. ATMs are open but limit withdrawals to just 60 euros per day.

After months of negotiations and speculations the last 3 days have seen explosive action taking place starting from Friday’s announcement by Tsipras for a 5 July referendum. This followed a breakdown of talks between Greece and its creditors and precipitated the ECB freezing its lifeline to Greek Banks.

The situation is still anything but clear. German Chancellor Merkel spoke with Obama on Sunday on the importance of keeping Greece in the Euro but is continuing to face internal political pressures from voters tired of continuing to bailout what is becoming to be seen as ‘a lost cause’.

Markets Dramatic Response 

European stocks plummeted the most in eight months at the growing possibility of a Grexit. The EU Stoxx 50 index saw its biggest drop since 2011. All Europe Stoxx 600 companies are seeing big drops with France’s CAC Index and Portugal’s PSI 20 Index seeing the biggest falls of more than 4.2% each.

What does all this mean to traders? Look at what happened this morning where the DAX and the euro opened with a massive gaps wiping out many traders positions and sending their accounts into negative balances.

Traders Protect Their Account Balances 

The only traders covered by this risk are those like easy-forex traders that have guaranteed stops in place. Setting stop loss and take profit orders allow traders to limit their risk and lock in any profits. easy-forex not only guarantees the rates, this safety feature is offered to their traders for free, unlike the few other brokers that do offer guaranteed stops but do so for a fee.

Similarly, while other brokers are widening spreads, as is typical in volatile markets, easy-forex is standing by its fixed spreads policy ensuring traders always know the cost of their trading. Combine that with guaranteed stops and easy-forex traders get the best of all worlds; avoiding that nightmare of trading – slippage, and ensuring their rates are filled as they set them.

These may be volatile days to consider trading and may offer opportunities that don’t come across often. However, where there is the potential for great gain is also the potential of loss. Tomorrow the Greek bailout expires and 1.5 billion euros are due for repayment to IMF. What risk management strategies do you have in place?