Rebirth of the Capital Legend

"Boss Gu, while the pound sterling exchange rate is retreating to the 1.5000 mark, we should decisively close our positions and reduce our long positions, right?" In Hong Kong, in the main fund trading room of Tianhe Capital, trading team manager Xie Hongxing saw that Gu Chijiang still did not make a corresponding remedial strategy despite the obvious rebound in the pound sterling exchange rate, and could not help but remind him, "The dominant sentiment direction of the market is still in the short direction, and we cannot have too high expectations for the rebound trend."

Gu Chijiang glanced at Xie Hongxing and said, "The trend of the pound exchange rate tonight cannot be speculated by common sense. The current rebound trend has not yet stopped. Let's wait and see. If we make a mistake in closing positions at this position, we will still fall into a very passive situation."

"But..." Xie Hongxing wanted to say something.

Gu Chijiang interrupted him and continued: "After the pound exchange rate broke through the 1.5000 point, there was no overly extreme emotional feedback and extreme trend, and it was able to rebound quickly, which shows that the current pound exchange rate trend has not deviated from the oscillating trend pattern.

In terms of market news, the negative impact has already been reflected.

In addition, when the volume exploded just now, many intraday short-term bulls and bears in the market had already taken profits and stopped losses. At this time, the momentum for selling in the market was obviously insufficient.

In this case, I think it is entirely possible to wait a little longer.

If the trend of the pound exchange rate can quickly repair the 1.5000 point, then the previous wave of sharp sell-offs is purely a trap to lure short sellers.”

"Luring shorts?" Xie Hongxing was stunned for a moment, then said, "Large-scale selling, a shock of nearly 200 points to lure shorts, shouldn't it be possible? It seems that the various fund groups in the market, under the guidance of the concentrated increase in positions of the main short-selling funds, are overreacting to the Bank of England's intervention in the foreign exchange market that is lower than the market's general expectations."

Gu Chijiang said: "The fluctuation amplitude of the pound exchange rate tonight is two or three hundred points, which is not too large."

"The focus is not on the amplitude, but on the changes in market expectations," Xie Hongxing said. "As far as I know, the Bank of England has no plans to further intervene in the foreign exchange market. If expectations do not change significantly, the pressure on the pound exchange rate to repair the 1.5000 mark is still very high.

Moreover, although there are no major changes in the current market news.

However, the strength of short-selling funds in the market, especially the main short-selling funds, and expectations are clearly increasing.

In addition, from the technical analysis of the market trend, the pound exchange rate has clearly broken away from the previous large shock range platform and formed a downward breakthrough trend. "

During their brief conversation...

In just two or three minutes, the pound exchange rate has turned downward again from around 1.4960 and quickly fell below 1.4900.

Gu Chijiang saw that the exchange rate of the British pound was indeed difficult to rise back above 1.5000 points.

At the same time, we saw the floating losses of the fund's positions further expand.

Finally, he gritted his teeth and made up his mind, sighed heavily with helplessness, and began to follow Xie Hongxing's advice, concentrating on reducing his positions and closing all positions to stop losses.

As for the pound sterling exchange rate, after a brief rebound, it has not been able to regain the 1.5000 mark.

And at the same time it quickly went down again.

Hong Kong City, Mitsui Yoshitomo Investment Company, main fund trading room.

Sato, who was in charge of the investment operation on the pound exchange rate, gritted his teeth and reduced his positions to stop losses when he clearly sensed that the market trend was not right and the short-selling force on the market was getting stronger and stronger.

This was accompanied by the reduction of positions by early bullish institutions such as Mitsui Yoshitomo Investment Co., Ltd., Tianhe Capital, and Leading Capital.

The pound sterling is becoming increasingly weaker.

At 3 a.m. Yanjing time, the pound sterling exchange rate fell again to 1.4860.

At 3:15, the pound sterling exchange rate hit a new intraday low of 1.4820, and the momentum of the sell-off remained very strong, with no sign of weakening.

At 3:37, the pound sterling exchange rate fell below 1.4800, hitting a new low of 1.4770.

At 3:45, the pound sterling exchange rate hit a new low at around 1.4730.

“Looking at this pattern, has the market chosen to break downward?”

Noting that the pound sterling exchange rate is in a downward trend, with each wave more severe than the last, and that long positions in the market have continued to decline sharply, while short positions have increased rapidly, a situation of "long killing long" has basically formed, said Ichiro Hashimoto, trading department manager at the "Bridge Exchange" hedge fund trading room, Nomura Bank Investment Department, Tokyo.

"It looks like it has indeed broken downwards," said fund manager Shangbin Heyi. "I never expected that the Bank of England would abandon the pound exchange rate near the 1.5000 mark."

"Sure enough, expectations that are too consistent are indeed difficult to achieve," said Hashimoto Ichiro. "I have felt that there are some problems with the market's consistent bullishness."

"Once the pattern of longs killing longs is formed, it will be difficult to reverse the market trend." Shangbin Heyi said, "It seems that it is time for us to change our trading strategy."

"What are you going to do?" asked Ichiro Hashimoto.

Shang Binhe smiled and said, "Since the market trend has basically formed a direction and has made a unilateral breakthrough, our previous hedging strategy and the strategy of both sides making orders are of no use. At this time, I think we can close the long position and only keep the short position."

"Should we continue to wait?" Hashimoto Ichiro said, "I feel that although the current market trend and sentiment have basically leaned towards the short side, based on the comprehensive market information, the referendum result tomorrow is still more likely to lean towards staying in the EU.

At this time, the pound exchange rate broke through the 1.5000 mark.

The market has already fallen 300 points. This distance has basically fully reflected all the negative market factors that exceeded the expectations of institutions tonight, and also reflected some unfavorable results of the Bank of England's intervention in the foreign exchange market.

Moreover, there is a profit margin of 300 points.

It is also enough to make many speculative short-term short-selling funds in the market close their positions and take profits.

In addition, the market's net long position has gradually returned to a relatively balanced position between long and short positions, which also shows that a large number of long positions in the market have completed the closing and stop-loss operations.

I think……

At this position, if we continue to move downward.

In the short term, at least before the referendum results are officially finalized tomorrow, the pound sterling exchange rate may not have much room to fall and strong momentum to fall.

What's more, the current black market exchange rate has fallen to 1.4300 points.

It basically didn't fall much.

The previous obvious panic run effect is gradually easing as the pound sterling exchange rate plummeted to its historical low before the referendum resolution came out.

In this case, I think there is still momentum for the pound to rebound. If we give up the hedging strategy and choose to hold positions unilaterally at this time, it seems not a good time. "

"Do you think... the pound exchange rate has reached this point and still cannot be said to have chosen a breakthrough direction?" Shang Bin Heyi asked, "Do you think that from now on, until the referendum result is officially announced tomorrow, the pound exchange rate will still remain in a relatively large fluctuation range?"

Ichiro Hashimoto nodded and said, "Yes, that's what I mean."

"Taro, what do you think?" Kamibing Heichi did not make a decision immediately, but looked at Taro Shinzawa, the head of the market research department, standing beside him.

Shinzawa Taro thought about it and responded, "I think we can take another look at it."

"Okay." Shang Binhe nodded slightly and asked, "Is there any new news in the current market?"

Taro Shinzawa replied: "There is basically no news about tomorrow's referendum and the Bank of England, but there are indeed many dynamics in terms of news from the main long and short institutions in the market."

"What's the news?" Shang Bin Heyi continued to ask.

Taro Shinzawa replied: "According to the latest developments, Citibank has slowed down its selling of pounds in the offline market, but they are still increasing their short positions in the online trading market. Blackstone Group has chosen to stop profit on some of its short positions. Goldman Sachs and Bank of New York Mellon have not made any clear moves in the trading market except continuing to release reports that are bearish on the pound exchange rate.

In addition to the 'Evolution 1' hedge fund, other foreign exchange trading funds under Aberdeen Asset Management have also begun to intervene in the pound exchange rate market.

In terms of Chinese capital, there are two institutions: Huayin International and Huayi Capital.

Based on the changes in the trading positions of the two major institutions in various exchanges, it can be seen that both institutions are still increasing their short positions.

European capital...

Barclays Investment Bank has increased its short position investment, and UBS International is also reducing its short position significantly.

However, many institutions such as Pacific Capital, Huifeng Bank, BNP Paribas Investment Bank, etc. seem to be still holding on, and their long positions have not been reduced. "

"What about the Mitsui Yoshitomo organization?" asked Shangbin Heyi.

Taro Shinzawa replied: "According to the information we have learned, the fund products managed by Mr. Sato of Gangcheng Mitsui Jiayou Investment Company have suffered losses of more than $4 million. It is estimated that if the pound exchange rate continues to fall, it will soon be unable to bear it and will have to stop losses."

"Haha..." Shangbin Heyi couldn't help laughing when he heard the news, and said, "Sato's gamble looks like he's not far from being ruined."

"Mr. Shangbin, the exchange rate of the British pound has started to rebound again," Hashimoto Ichiro reminded.

Shang Bin Heyi nodded slightly and said, "I see. It seems that it is indeed as you said. This position will continue to strangle intraday speculative trading and will most likely form a new range of shocks. In this case... let's continue to maintain the hedging trading strategy and wait for the opportunity."

After saying that, he calmed down and continued to observe the trend of the pound exchange rate.

As market trading time continues.

After the pound sterling exchange rate plummeted to around 1.4700 points, it rebounded again after the momentum of the plunge was exhausted. However, it took only more than ten minutes to recover the 1.4750 point mark.

after that……

Until 6 a.m. Yanjing time.

The pound sterling exchange rate has been fluctuating between 1.4700 and 1.4850.

During this volatile process, the number of long and short positions in the market began to accumulate again.

However, due to the market sentiment feedback and the latest news feedback, they are still biased towards the short direction. Therefore, in terms of the number of new long and short positions, the speed of new short positions is still significantly faster than the speed of new long positions, thus forming a range-bound oscillation trend of sharp declines and slow rises.

"Boss Su, why don't you go get some sleep?"

When the market trading time reached 7: a.m. Yanjing time, that is, when it began to transfer from the U.S. trading session to the Asian trading session again, in Hong Kong, inside Huayi Capital, in the main fund trading room, the trading team manager Qu Zecai looked at Su Yi, who had been up all night, and expressed concern.

Su Yi stood up from his office chair, took a look at the pound exchange rate trend which was still fluctuating between 1.4700 and 1.4850, and replied with a smile: "Today is the official referendum day. The market's uncertainty is still great, and the fluctuations will become more and more intense. This battle between bulls and bears may really enter its climax from now on. We need to pay attention all the time."

"We are all watching here." Qu Zecai said, "There shouldn't be any problems."

Su Yi rubbed his eyes, smiled, and said, "It's okay. I took a nap just now when it was getting light. I've rested enough. Now there are more than 8 hours before the official referendum starts. Everyone, hold on. After this vote is done, I'll let everyone take a few days to relax."

"Thank you, Mr. Su." The traders in the trading room responded.

In fact, seeing the continued decline in the pound exchange rate, the crazy growth in the fund's aggregated holding accounts, and the profit figures of the sub-accounts operated by each trader, no one was sleepy at all. Both emotionally and mentally, everyone was basically in an excited state.

After this night of violent market fluctuations and continued battle between bulls and bears.

At this moment, Su Yi is in charge of the main fund product "Hua Yi Cheng Yuan No. 1".

A total of 30 short positions in the British pound exchange rate were held, with a total margin of US$2.5 million for the short contracts and a total floating profit of more than US$6 million.

And just as the traders responded.

Just eight hours before the referendum officially began, new and important news suddenly broke out in the market.

According to the latest market news, the global foreign exchange trading market, various exchanges, and major global market makers, companies, and investment banks have all announced that in order to prevent extreme trading risks, the trading leverage of the British pound exchange rate will be reduced to a maximum of 10 times.

This means opening a standard contract for long and short positions in the British pound exchange rate.

A minimum of $10000 in funding is required.

Of course, weakening the leverage ratio and significantly increasing the trading margin will reduce the number of small capital groups speculating, leaving room for large capital and large institutions to speculate.

"Boss Su, according to the new rules just released, the cost of opening a position has increased by at least 1%!" Qu Zecai said with emotion, "If we want to maintain the size of our positions in the future, we may not be able to reduce or open positions at will. The exchange is obviously doing this to crack down on intraday speculative funds in the market and reduce the volatility of the pound exchange rate!"

Su Yi's eyes were like torches, and he said calmly: "It doesn't matter. At present, our capital reserves are still relatively abundant. This rule change will not have a big impact on our organization, nor will it have a big impact on the trend of the pound exchange rate. The most important thing at present is the news drive about the referendum and the attitude of the Bank of England to intervene in the market." (End of this chapter)