Rebirth of the Capital Legend

Chapter 275 Changes in the long and short patterns in the market!
“Why did it open so much lower?”

Seeing that the pound exchange rate opened sharply lower after the weekend news and the brewing market sentiment, and directly lost the 1.5300 point mark, at 9 o'clock in the morning, during the Asian trading session, in Hong Kong, inside the main fund trading room of 'Tianhe Capital', Gu Chijiang frowned visibly.

With continued capital investment...

Now, the main fund product of "Tianhe Capital" managed by him has held more than 6 long positions, and almost half of the positions have a construction cost of more than 1.5300 points.

The sharp drop in the pound exchange rate at this time directly caused the floating profit of his positions to approach zero.

If the pound exchange rate goes down further next.

Then the more than 6 long positions in his hands would fall into an overall loss state.

"It's mainly because the meeting and negotiation on Saturday didn't deliver the results and expectations that everyone wanted," Xie Hongxing responded. "Also, at yesterday's financial summit, Huayi Capital, Huayin International, Aberdeen Asset Management and other institutions expressed a clear bearish view, which also affected market sentiment."

"Then it won't open so low." Gu Chijiang sighed. "Didn't they say that according to preliminary voting estimates, more than 60% of people are in favor of staying in the EU? This means that the referendum result on the 23rd will be basically no surprise. With such expectations... can't we hedge against the negative news and sentiment in the market?"

"It is always difficult to predict the short-term trend of the market," Xie Hongxing said. "However, judging from the underlying logic, I think there is no need to worry too much about the expected referendum result on the 23rd and the monetary policy direction of the Bank of England."

"Let's hope so." Gu Chijiang said, "Otherwise we might have to reduce our positions passively."

Compared with the main short-selling institutions in the market, such as Huayi Capital, Huayin International, Aberdeen Asset Management, etc., as well as the main long-selling institutions in the market, such as Pacific Capital, UBS International, and Huifeng Bank, the financial strength of Tianhe Capital is not strong.

A long position of more than 6 lots is already a heavy position for Gu Chijiang.

If the subsequent pound exchange rate trend continues to fall short of expectations.

He may be forced to reduce a lot of his positions before the referendum day on June 6, and control the risk of his holdings within a reasonable range.

Just when Gu Chijiang was expressing his emotion and felt that the gap-down opening of the pound sterling exchange rate was beyond his expectations.

Also in the trading room of 'Huifeng Global Asset Management Universal Hedge Fund' in Hong Kong, Godfrey, the manager of 'Universal Hedge Fund', was also a little surprised at the opening performance of the British pound exchange rate. However, although his face looked a little surprised, he did not show any worry or concern.

"Mr. Godfrey, the pound exchange rate opened directly below 1.5300 points..." said Gerald, the head of the trading team of 'Universal Hedge Fund'. "I am afraid that this will have a huge impact on the long positions in the market, especially the many long positions that have already incurred floating losses overnight. The confidence of holding positions will be shaken."

"It's okay." Godfrey smiled and said, "The underlying logic of the market's long position is still there. At the same time, there is also a relatively consistent expectation support for the referendum result on the 23rd. In this case, no matter how hard the bears try, even if they continue to invest funds to guide the market trend, it will be difficult to continue to sell off. On the contrary... after this wave of overnight sell-offs at the beginning of the trading session is over, the pound exchange rate will have a good opportunity to go long."

"I'm afraid everyone's confidence in holding positions will be shaken," said Gerald.

"It shouldn't be that serious," Godfrey said. "Look at the trend of the pound sterling exchange rate in the past half hour after it opened sharply lower. It is obvious that the volume in the market has not increased rapidly. This shows that neither the main short-selling institutions in the market nor the long investors holding positions are in a hurry to increase their positions to continue to sell off, or to panic and close their positions to cover their losses."

After hearing what Godfrey said, Gerald took a closer look at the volume changes in the pound exchange rate.

Found that to be the case.

So, his originally nervous mood gradually relaxed.

At this time, the number of long positions in the British pound exchange rate held by their fund has exceeded 23 lots. Although this holding volume is not high considering the scale of the entire fund of tens of billions of US dollars, their holding costs have been raised a lot due to the continuous increase in positions in the previous period.

At this moment, the long positions held by the fund still have a slight floating profit.

But there is not much floating profit left.

If the pound sterling exchange rate continues to fall and continues to touch the 1.5200 point line, I am afraid that their operations on the pound sterling exchange rate will change from active to passive.

However, it is clear that...

Godfrey does not think the pound sterling exchange rate has room to fall further.

In fact, the subsequent trend of the pound sterling exchange rate was exactly what Godfrey expected.

As the Asian trading session continued, the pound sterling exchange rate, which had opened sharply lower, began to gradually recover as the bulls in the market increased their holdings and the intervention of bottom-fishing speculative funds, and once again launched an attack on the 1.5300 point, which was the psychological barrier of the previous bulls in the market.

At 10:36 am, the pound sterling exchange rate regained the 1.5300 mark.

At 11:09 am, the pound sterling exchange rate hit a new intraday high of 1.5320, thus completely recovering all the losses from the intraday opening low and returning to above last Friday's closing point.

"Alas, the pound exchange rate has returned to the oscillation range of 1.5300 to 1.5400!"

Noticing that the pound exchange rate returned to above the 1.5300 mark, one of the foreign exchange market investors and speculators gathered on the online discussion platform sighed and said, "I was originally thinking of following Mr. Su to continue short selling and make a few dozen points of short-term profit, but I didn't expect... I ended up losing hundreds of dollars instead of the gains."

"It is obvious that today's low opening is a short trap to lure short sellers."

"If you ask me, before the referendum result on June 6, which is Thursday, comes out, whether the pound breaks up or breaks down, it is very likely to be a false breakout."

"Unless there is a concentrated liquidation of long and short positions in the market, or a large-scale covering, which leads to a stampede of the main forces of the long and short sides, it is highly likely that the pound exchange rate will fluctuate around the 1.5300 point and 1.5400 point range in the next few days."

"Looking at the opening situation, I thought the bears would continue to sell off, but I didn't expect..."

"I've already said that going long around 1.5300 and going short around 1.5400 will never be wrong. It's impossible to have a big rally at this time."

"Look at the number of open long and short positions in the market. The overall long and short orders have increased again!"

"The number of long and short positions in this market is indeed becoming more and more terrifying."

“It feels like the calm before the storm.”

"It's definitely before the storm, but the market trend is far from calm. The fluctuation range is around 100 points at any time, which is already quite dramatic."

"In addition to the sharp fluctuations in the pound exchange rate, the volatility of gold spot has also increased recently."

"Of course, the referendum on Thursday, the 23rd, will affect more than just the pound exchange rate. It will also affect the global financial sector and even global economic expectations."

"I feel like some funds are using spot gold to hedge against the risk of holding positions on the pound exchange rate, right?" "I feel the same way. Hehe... To be honest, it's a good time to speculate in spot gold. After all, the leverage of spot gold is not restricted at present, and small funds can leverage big profits."

“Long or short?”

"If the pound sterling exchange rate plummets, the corresponding spot gold price should also surge, right?"

"It's not certain. It depends on how the US dollar index moves. Relatively speaking, the trend of gold spot is not strongly correlated with the pound exchange rate. Gold is the counterparty of the US dollar."

“If you can’t completely hedge the trend, then it’s meaningless.”

"I think we should just wait and see. In the pound exchange rate market, there are so many open long and short positions. Once the power of one party is suddenly unbalanced, extreme market conditions will inevitably break out. In this case...if you make the wrong move, I'm afraid it will be too late to stop the loss. It's better to just wait and see."

"It feels like the current battle between longs and shorts in the pound exchange rate market has turned into a battle between our Chinese institutions and international capital."

“That’s a little bit true.”

"I read the short and long reports from major institutions at this time, and I feel that they all make sense and are logical!"

"That's for sure. Otherwise, how could so many institutions invest huge amounts of money in such a gamble?"

"The key is whether Huayi Capital, headed by President Su, can make a profit in this round. Previously, I always felt that President Su was a little weak, but I didn't expect that Huayin International would be so deeply involved now."

"It's not just Huayin International, Citibank, BNY Mellon, Aberdeen Asset Management, Blackstone Group...these are all big-name institutions!"

"Alas, with so many big capital institutions playing games here, to be honest... I really want to take a chance."

"I also want to bet heavily, but I am hesitant about whether I should bet on the long side or the short side."

"That must be an extreme market situation that bets on the short side. Anyway, I have made up my mind to stand on the side of President Su."

"I lost a lot of money by following Mr. Su's short selling. Sigh... I don't know how the market will go on the 23rd, but no matter what, there will definitely be extreme market fluctuations."

“You can trade on both sides and set a stop loss on both sides.”

"Hey, that's a good idea..."

Just as everyone was discussing, someone proposed a strategy model of two-way trading and two-way stop loss.

Tokyo, Nomura Bank headquarters, foreign exchange investment trading center.

The hedge fund trading department of "Bridget" and Shangbin Heyi, the main hedge fund manager, are adopting this kind of speculative strategy of bilateral trading and bilateral stop loss.

He caused traders to build long positions around 1.5300 points.

At the same time, it prompted traders to establish large-scale short positions around 1.5350.

For the long position, he set the stop loss at 1.5000 points, while for the short position, he set the stop loss at 1.5500 points.

After doing this.

No matter what happens next, the pound exchange rate will break through in any direction under extreme circumstances.

After hitting the stop loss, he can reap huge profits in extreme market fluctuations.

In addition, this strategy also avoids continued losses during the volatile trend of the British pound exchange rate, forming a perfect hedging transaction.

"Mr. Shangbin, I heard that the hedge fund product managed by Mr. Sato of Mitsui Yoshitomo Investment Company has established more than 10 long positions on the British pound exchange rate." When Shangbin Heyi was feeling proud of his insurance strategy, Taro Shinzawa, a market researcher at the company's foreign exchange investment and trading center, reported, "It seems that Mr. Sato has bet his future on the British pound exchange rate."

"Haha...you're simply stupid to gamble so much." Shangbin Heyi commented bluntly.

"I also think that the extreme market conditions on the betting side are too risky," said Taro Shinzawa. "But currently 90% of our domestic institutions are bullish on the pound exchange rate, and Mitsui Yoshitomo Bank also supports him in doing so."

"That doesn't change the fact that Sato is a fool." Shangbin Heyi said, "In this round of long-short battle in the pound exchange rate market, there are not only Chinese institutions that were once seen as fat meat on the chopping block, but also Wall Street giants such as Aberdeen Asset Management, Citibank, Bank of New York Mellon, and Blackstone Group. It will not be as easy as before to force these big institutions to liquidate their positions or stop losses, or to snatch food from their mouths. If the general market expectations are not realized, and the pound exchange rate trend fluctuates extremely in the short direction on the 23rd, Sato... will just have to wait to ruin his career and resign. By then, with huge losses, those people in Mitsui Yoshitomo Bank who now allow him to gamble will not say anything good about him."

"I originally thought that in this round of the pound exchange rate war between bulls and bears, the extreme market fluctuations must be biased towards the bulls," said Taro Shinzawa. "But now...especially after the failure of the negotiations on Saturday, I am afraid that the uncertainty is getting bigger and bigger. It is really hard to say what the referendum result on the 23rd will be."

"This is also the reason why the rate of increase in short positions in the current pound exchange rate market has begun to surge." Shang Binhe said with a smile, "The market's net long position has been gradually declining. It is estimated that when the 23rd comes, the net long position will return to a relatively reasonable range.

However, no matter what the result of the referendum on the 23rd is, it will not have much impact on us.

Double-sided trading and double-sided stop loss.

With the double insurance strategy, I don’t believe that I can’t make money in this market? "

After saying that, Shangbin Heyi continued to instruct traders to increase their positions, and at the same time turned his attention to the market trend of the British pound exchange rate again.

Just watch the trading time continue to pass.

At this time, the pound sterling exchange rate has rebounded to the 1.5330 mark after repairing the intraday low opening gap.

However, due to the news and emotional factors over the weekend.

Although the pound sterling exchange rate is slowly recovering, it can be seen from the market, changes in long and short orders in the market, and changes in intraday volume.

The upward pressure on the pound sterling exchange rate can still be clearly felt.

It is much larger than last week when the main bulls in the market took the absolute initiative.

(End of this chapter)