Rebirth of the Capital Legend

Chapter 276 The trend of 'more killing more'!
"The bullish forces and expectations in the market are still strong!"

Seeing that the pound exchange rate recovered its intraday low opening range so quickly, Qu Zecai exclaimed in the trading room of the main hedge fund "Huayi Chengyuan No. 1" inside the "Huayi Capital" institution in Hong Kong.

"It's okay." Su Yi smiled and said, "The bearish sentiment and expectations in the market have been growing rapidly as more and more investors, speculators, and major institutions continue to be bearish and short-selling. The short-term bullish counterattack at this time cannot change the volatile trend of the pound exchange rate."

"It feels like the current trend of the pound exchange rate is a bit stuck here." While Su Yi was speaking, Meng Shengfei, manager of the second investment department of Huayin International, which is linked to Huayi Capital, responded, "Based on the current market news and various information that have been revealed, it is obviously not enough to help the long and short sides in the market, and to defeat the confidence of either side, thus leading to a unilateral breakthrough trend in the market."

"At this time... the pound exchange rate is stuck in the 1.5300 to 1.5400 range. Should we say this is a positive for us?" said Kong Fansheng, manager of Huayin International's Institutional Investment Department. "With net long positions still at over 70, and the market fluctuating, time is clearly on our side."

"Old Kong, why do you say that?" Meng Shengfei asked without quite understanding.

Kong Fansheng responded: “Because the trend of the pound exchange rate has repeatedly failed to meet the expectations of the bulls and has never been able to break upwards…then the bearish comments in the market, as well as the ideas and actions of various institutions to short, will become more and more intense, more and more numerous, and more and more concentrated.

That is, as market trading hours progress.

In the volatile market trend, it is foreseeable that the market's short-selling force will only grow stronger.

In addition, the continued volatility of the pound sterling exchange rate can easily lead to high holding costs. Most of the long investors and speculators who opened positions above 1.5350 points and still hold considerable positions are uneasy and follow suit to take profits or close their positions.

Although, in the case of unclear market trends.

The group of short position holders in the market will also have concerns in this regard, and may be prompted to take profit or stop loss and close their positions due to short-term sharp market fluctuations.

However, looking at the trend of the pound sterling exchange rate over the past week.

It is obvious that at this position, the cost of new short positions is very favorable, while the cost of new long positions is obviously unfavorable.

In other words, at this time, the short and long positions in the market are held by retail investors and hot money.

The motivation for long positions to take profits and close losses is definitely greater than that of short positions in the market due to the different influences of holding costs.

This is also a fundamental reason why the number of net long positions in the market continues to decline sharply and the gap between the number of long and short positions in the market is getting smaller and smaller. "

"Mr. Kong is very sensible." Frederick, the hedge fund manager of Aberdeen Asset Management's 'Evolution No. 1', agreed with Kong Fansheng's analysis and responded with a smile, "The market news feedback over the weekend was obviously not as good as the expectations of the long investors in the market, which is why the pound opened significantly lower this morning.

However, this is due to the psychological inertia of short-term speculators in the previous market.

I think the swing trading strategy of going long below 1.5300 and going short around 1.5400 is the most suitable for the current market development.

As a result, the pound sterling opened sharply lower in the early trading session.

A large number of long positions surged, pushing the pound exchange rate back to the 1.5300 point and rebounding trend. "

"That is to say... everyone thinks that the future trend of the British pound exchange rate will continue to fluctuate around the 1.5300 point and 1.5400 point range?" After listening to everyone's analysis and their inner opinions, Meng Shengfei pondered for a moment and continued, "But I don't think so."

"Oh?" Kong Fansheng asked in surprise, "What do you think?"

Meng Shengfei chuckled and said, "I think that with the large number of net long positions still existing in the market, especially when market news and sentiment are not enough to lead the main long institutions in the market to continue to squeeze out, the upward rebound of the pound exchange rate will only become weaker and weaker.

And, I think we are now...

It is still necessary to continue to concentrate investment funds to guide other bearish and short-selling funds in the market to continue to follow suit and increase their positions, and at the same time guide the long investors who are not firm in their positions in the market to focus on taking profits, stop losses and covering orders, and continue to put pressure on the trend of the pound exchange rate. "

"Continue to invest money to put pressure on us?" Kong Fansheng asked.

"Yes!" Meng Shengfei nodded firmly and continued, "The current sentiment feedback in the market is beneficial to us. If we continue to invest funds to suppress the pound exchange rate below 1.5300, the bullish pressure in the market will be greater.

Those long position holders who were already hesitant will become even more hesitant and anxious.

And there is...

Based on the market trends in the past ten trading days.

The main long institutions in the market should have increased their long positions above the 1.5300 level.

That is to say, most of the long positions held by these long institutions in the market have position costs above 1.5300 points.

If we suppress the pound exchange rate below 1.5300.

Then most of the long positions of these on-site long institutions will incur floating losses.

These floating losses will erode the profits of the long positions they previously established and will bring great pressure to their overall positions.

There is this huge pressure on holding positions.

Then, it is impossible for them to continue to invest heavily when the market trend is not particularly clear.

In addition, there are far more long positions than short positions in the market, and many long investors who are nervous and not determined have taken profit and stop loss to cover orders, which suppress the market trend.

I believe that even if we do not continue to invest huge amounts of money, we can still gain absolute operational control in the market."

"What Mr. Meng said...seems to make sense!" Frederick pondered Meng Shengfei's words for a while and said with a smile, "Using news, emotions, and the imbalanced long and short positions in the market, we can concentrate funds to suppress the market and interfere with the trend of the pound exchange rate. This will eliminate the psychological expectations of many short-term bulls in the market and the psychological barrier of 1.5300 for the pound exchange rate. This will indeed cause a certain degree of damage to many bulls in the market and many short-term intraday trading bull speculators, and will also help us take the initiative in market operations."

"I think this strategy is good, too." Su Yi also smiled and responded. "But continuing to concentrate funds, increasing short positions, and suppressing the market trend will also put a lot of pressure on us." Qu Zecai, who heard the discussion, thought for a while and reminded, "Mr. Su, our current positions are already quite heavy, not to mention that all major exchanges and market makers have increased the trading margin ratio for the pound exchange rate.

If we follow the strategy Mr. Meng mentioned.

I am afraid that the risk of our holdings will increase sharply.

Moreover, if the expected strategic results are not achieved after the concentrated large-scale increase in positions, the counterattack of the bulls in the market will probably become more fierce.

my suggestion is……

We should still keep our positions within a reasonable and safe range.

Keep enough reserve funds and wait for the referendum results on Thursday, June 6, and make the final bet once the market trend becomes clear. "

Su Yi knew that Qu Zecai was a cautious person, and also knew what he was worried about. He couldn't help but smile and said, "We still have about $4 million in reserve funds left, right? This $4 million is enough to withstand the risk of market fluctuations before the referendum results are announced.

Furthermore, with the operating strategy of "using a little force to achieve a great result" as mentioned by Mr. Meng.

With the cooperation of market sentiment and market news.

We can suppress the exchange rate of the British pound below 1.5300 points, which actually does not cost much money.

As long as the pound exchange rate is quickly suppressed.

The group of short-term bullish speculators in the market who are trading intraday with their previous habitual thinking will experience a collapse in confidence, or feel that the market trend has changed, which will drive them to make corresponding changes in their trading strategies and perform quick stop-loss operations.

As long as we can induce changes in the expectations of these short-term bullish speculators, their trading strategies will change.

Then, the existing bullish forces in the market will experience a certain degree of internal collapse, forming a certain degree of long-killing-long situation.

Therefore, we should guide such market trends and strive to gain the initiative in market operations.

The price we pay will not be very high.”

"Mr. Su is right." Frederick said with a smile, "Once the pound exchange rate effectively falls below the range of 1.5300 and 1.5400, the intraday long speculators in the market will quickly change their expectations of the market and make stop-loss operations. At the same time, they will not dare to continue to go long without any worries near 1.5300."

After saying this, Frederick did not wait to continue discussing with Su Yi, Kong Fansheng, Meng Shengfei and others.

He immediately instructed Dennis behind him to quickly convey the corresponding trading instructions to the various groups of traders in the trading room.

And the moment he gave the order.

Huayin International's Investment Department 1 and Investment Department 2 also began to take action.

At the same time, Su Yi quickly turned around and instructed Qu Zecai to ask all the traders in the trading room to continue to quickly increase their short positions to suppress the trend of the pound exchange rate.

With the three major institutions, various groups of traders acted together.

Tens of millions or even hundreds of millions of dollars were invested rapidly in an instant.

When a large number of new short orders appeared on the pound exchange rate board, the pound exchange rate trend plummeted rapidly like a waterfall.

At 10:56 am, it took less than 5 minutes for the three major institutions to make the operation.

The pound sterling exchange rate plunged below the 1.5300 mark.

Immediately afterwards...

At 11:03 am, the pound sterling exchange rate continued to fall, falling below 1.5290.

At 11:17 am, the pound sterling exchange rate fell to the 1.5270 level, which wiped out all the efforts of the bulls since the opening of the morning session.

The pound exchange rate fell back to its opening point again.

At the same time, faced with the continued plunge in the pound sterling exchange rate, the number of short orders in the market continued to surge, and the net long position continued to decline sharply.

As expected, it was just as Su Yi, Kong Fansheng, Meng Shengfei and others had predicted...

Previously, a large number of intraday short-term speculators who had gone long at 1.5300 in the morning and believed that the pound exchange rate would continue last week's trend and continue to fluctuate around the 1.5300 and 1.5400 range began to panic in an instant.

Among them, there are many intraday speculators who have a keen sense of the market and are decisive.

Unconditional stop loss closing has begun.

As these intraday speculators who had gone long in the morning stopped their losses one after another, and as the three major institutions continued to short, the entire pound exchange rate market continued to trade over time.

The "long killing long" pattern quickly emerged.

At 2:12 p.m., the pound sterling exchange rate effectively fell below 1.5250 in this "long killing long" situation, and further slid towards 1.5200.

(End of this chapter)