Rebirth of the Capital Legend

"That's true." Qu Zecai nodded slightly and continued, "However, after the exchange increased the cost of opening a position, the number of small speculative funds in the market will definitely decrease significantly. It is estimated that the fluctuations in the pound exchange rate in the future will not be as extreme as before."

Su Yi smiled and said, "It's hard to say. The cost of opening a position has increased, but at the same time, the risk of holding the position has also decreased."

"At least the number of long and short positions in the market will gradually decrease," Qu Zecai said. "As long as the open positions in the market decrease, the volatility of the market will definitely slow down, and I estimate that many speculative capital groups will most likely choose the gold spot market to speculate on this trading opportunity."

"You're right." Su Yi responded, "Now the gold spot trading market has basically become the second battlefield for the main battle between long and short positions in this 'Brexit referendum' event, and because the trading rules are not restricted, speculative and hedging funds have shown a trend of exceeding the pound exchange rate trading market."

Qu Zecai thought for a moment and said, "Do we need to take some positions in the gold spot market? If the fluctuation direction of gold spot is always opposite to the fluctuation direction of the pound exchange rate, it seems that adding a long position in gold spot will save more money than adding a short position in the pound exchange rate, and the flexibility of operation seems to be greater."

Su Yi pondered for a moment and said, "No, although the current trend of gold spot market happens to form a negative feedback with the trend of the British pound exchange rate, the underlying logic is obviously different. There are many factors that affect the trend of gold spot price. We have not yet conducted an in-depth analysis of these factors. It is somewhat unwise to rashly move positions to the gold spot market.

Although now major exchanges and market makers have further significantly increased the margin rate for opening pound exchange rate orders.

But this only applies to newly opened positions in the market.

As for the trading orders that were opened previously and not closed, they are actually not affected.

Before the release of these trading rules, our fund products had already completed their position building targets and held short positions of 30 lots.

That is to say, under our firmly bearish overall trading strategy.

As long as you have 30 short positions in your hand, don't close them easily. According to the maximum limit of position size we set before, not many new orders will be added later.

In other words, it is under the current market trend.

This new trading rule will not have a significant impact on our institution or our fund."

"I hope so." Seeing Su Yi's insistence, Qu Zecai paused and gave up the idea of ​​building a position in spot gold. He continued, "Then let's continue to focus on the British pound exchange rate market."

Su Yi nodded, and then his attention focused again on the British pound exchange rate market.

As time turned into the Asian session and as trading rules changed, the intraday trading volume and fluctuation frequency of the British pound exchange rate did not decrease at all.

Faced with the increasingly approaching Brexit referendum date.

The vast majority of speculative funds in the world are still concentrated in the pound exchange rate market.

"The leverage ratio for sterling has been adjusted to a maximum of 10 times. However, the trading conditions, trading volume and fluctuation frequency have not changed at all compared with the previous US trading period. In fact, not only has it not decreased, but it has even intensified."

Note that the pound sterling exchange rate is still fluctuating violently at this time, and the trading volume continues to increase.

Among the large number of retail speculators gathered on the online trading platform, someone couldn't help but ask in confusion.

“It’s not surprising. Although the leverage ratio of transactions in the pound exchange rate market has been reduced and the margin rate has been increased, the desire and sentiment of global funds to make transactions have not decreased. On the contrary, as the referendum approaches, this desire and sentiment is still rising.”

"As long as the outcome of this battle between longs and shorts in the pound exchange rate market remains undecided, the frequency and volume of market fluctuations will not be easily reduced."

“I think there is nothing wrong with reducing the trading leverage ratio.”

"Before the referendum officially came, the trading leverage ratio was greatly reduced. This shows that the major financial institutions, market makers and other groups around the world have prepared prevention strategies after experiencing the 'Swiss franc black swan' event last year. Are they all afraid?"

"How can I not be afraid? In the current pound exchange rate market, the number of open long and short positions is still more than 400 million lots."

"The open long positions in the market have dropped by almost 100 million lots from the peak last night."

"The rate of increase in the number of open long positions in the market is obviously slower than the rate of increase in the number of open short positions. Does this mean that the market's long and short trends have reversed at this stage?"

"The holdings of large institutions have indeed changed compared to the previous few days."

"Not necessarily. Judging from the overall scale of long and short positions, the main long and short parties should be evenly matched, and the market is still in the form of a net long position. Although the scale of the net long position has dropped from nearly one million lots last night to less than 100,000 lots now, it is still a net long position after all!"

"Hasn't the pound exchange rate on the black market already collapsed? I feel like at this stage, the success rate of shorting is obviously higher than that of longing, right?"

"That's hard to say. The Bank of England has hundreds of billions of dollars in foreign exchange reserves, which have not yet been used on a large scale."

"Has the exchange rate of the pound on the black market almost stabilized?"

"I still feel that the pound cannot fall much further at this point, and judging from the preliminary voting results that have been made public so far, the probability of remaining in the EU is still high."

"Anyway, before the referendum results are officially announced, it seems that the main forces of long and short positions in the market will still be unable to determine the winner."

"That is to say, before 4 p.m., will the pound exchange rate still fluctuate sideways?"

"It is estimated that it will continue to fluctuate between 1.4700 and 1.5000. As for returning to above 1.5000, I think it will be very difficult unless the referendum result shows that the euro will continue to remain in the EU!"

"If the pound exchange rate cannot return to above 1.5000 before the referendum, the main long institutional groups in the market... should be in a completely passive situation, right? After all, in recent times, the cost of opening positions for most long institutions is above 1.5000 points."

"Judging from the current market trend, the main long institutions in the market are definitely in a passive situation."

And as a group of speculative retail investors have discussed...

At this time, in the trading rooms of Hong Kong City's 'Huifeng Huanyu No. 1 Main Hedge Fund', 'Mitsui Yoyo Hong Kong City Investment Company Main Hedge Fund', and 'Tianhe Capital Main Hedge Fund', as the managers of the core long-term main institutions in the market, Godfrey, Sato, and Gu Chijiang were indeed in a very tangled mood, and the main hedge fund products they were in charge of were indeed in an extremely passive situation.

"Mr. Godfrey, do you have any latest market news about the Bank of England and the preliminary referendum vote count?" Faced with the loss of hundreds of millions of dollars in the main fund account, Sato stayed up all night in the main fund trading room of Mitsui Jiayou Hong Kong City Investment Company. Seeing the trend of the pound exchange rate, which gradually stopped falling and rebounded near 1.4700 points, he couldn't help but ask Godfrey of 'Huifeng Huanyu No. 1 Hedge Fund' through the instant communication tool, "Do you think the underlying logic of going long on the pound exchange rate has changed now?"

Godfrey stared at the pound exchange rate that had rebounded to around 1.4760, and responded: "I think the underlying logic of going long on the pound exchange rate has not changed at present. Through various data analysis, the referendum voting results in a few hours will most likely still lean towards continuing to stay in the EU. And according to the information I have learned, the Bank of England's determination to maintain the stability of the market exchange rate has not wavered at all."

"Have the preliminary vote counts for Glasgow, Manchester, Sheffield... come out?" Gu Chijiang said nervously at this time, "Has Mr. Godfrey heard any news?"

Among the three major institutions involved, it is obvious that Gu Chijiang and Sato both believe that Godfrey is more informed.

In fact, as the most powerful large financial institution in the UK, Huifeng Bank is indeed much stronger than Tianhe Capital and Mitsui Yoshitomo Investment Company in market information collection, analysis and related intelligence capabilities.

"It is late at night in London now," Godfrey said. "The relevant market news is very limited. The current market fluctuations cannot be boosted by news, but can only be driven by emotions and everyone's predictions about the referendum results in a few hours."

"Well, that being said..." Sato said, "But at this position, with a large floating loss on the position, it is really passive. Even if you want to continue to increase your position and go long, you will still face great pressure and risk in holding the position."

He predicted in his heart that the pound exchange rate would most likely continue to rebound.

It can be in specific strategic changes.

However, he did not dare to continue to increase his long positions significantly and continue to bet on the rebound of the pound exchange rate.

Because of this position, if he continues to increase long positions significantly, if he makes a wrong judgment and the pound exchange rate falls sharply again, the main fund he is in charge of may not be able to hold on until the referendum results are released in the afternoon, and will have to face large-scale stop-loss and exit, or even a margin call.

"That's true." Gu Chijiang took over and said, "I have reduced a lot of positions and stopped losses on many long positions that were entered at high levels, but the losses are still extremely serious. Alas... I bought too many long positions above 1.5000 points, especially above 1.5200 points, which led to too much floating losses and eroded a lot of reserve cash, making the current situation extremely passive."

"Be confident." Godfrey heard what the two said and knew that they were a little impatient at the moment, so he couldn't help but persuade them, "The more passive you are, the more you must be confident in holding your position. I believe that as time gets closer to the referendum time node, the trend of the pound exchange rate will definitely continue to rebound and recover the losses caused by the short-selling counterattack last night."

He is in charge of the main hedge fund "Huifeng Global No. 1".

The current floating loss is also very serious.

However, since the capital of this hedge fund is very large, the available funds in the account are relatively abundant.

Therefore, Godfrey's mood swings are still basically stable.

"After the black market exchange rate stabilized, the gap between online and offline exchange rates is narrowing." Godfrey paused and continued, "This shows that the momentum of the sell-off led by the main short-selling institutions in the market has basically exhausted. In the future, whether from the perspective of potential news, sentiment, or capital analysis, the pound exchange rate should rebound sharply, and even repair last night's decline and return to above 1.5000 points."

With his firm words...

At 8:42 am Yanjing time, the pound sterling exchange rate rebounded strongly and returned to above 1.4800 points with the combined help of the exhaustion of the momentum of the sell-off, the closing and covering of many short speculative orders, and the increase of long positions by a large number of bullish structures at low levels.

And because of the Asian session, Wall Street short-selling capital gradually calmed down after fighting all night.

This gave the main bullish capital concentrated in core areas of East Asia such as Hong Kong, Tokyo, and Seoul an opportunity to launch a strong counterattack and regain lost ground.

At 9:30 am, all Asia-Pacific financial markets were open for trading.

Trading activity in the pound exchange rate market is increasing. At the same time, bullish sentiment continues to improve, and the net long position in the market has climbed back to more than 30 lots.

At 10:07 am, the pound sterling exchange rate returned to 1.4870, rebounding more than 150 points from the low.

At 11:17 am, the pound sterling exchange rate hit the 1.4900 mark for the first time that day.

However, just as a large number of bullish main funds in the market, as well as countless speculative funds that were long during the day, began to expect the pound exchange rate to continue to rebound, break through the constraints and return to the 1.5000 point mark, near 12 noon, the pound exchange rate hit a high of 1.4923 points during the day and then began to plummet.

At 1:20 p.m., the pound sterling exchange rate took a sharp turn for the worse and fell below 1.4850 again.

At 2:08 pm, the pound sterling exchange rate fell below 1.4800 again, returning to its intraday low.

At this time, there are less than 2 hours left before trading begins in the European trading session, and there is still one and a half hours left before the referendum officially begins.

And during the market trading hours, the time when the referendum will officially start is getting closer and closer.

Pound sterling exchange rate market.

The number of open long positions and the immediate trading volume are also rising steadily. Even the number of open long and short positions in the market has now climbed to more than 500 million lots. Among them, the long position is as high as nearly 560 million lots, which has set a historical high in the pound exchange rate trading.

In addition, the number of long and short positions has climbed to historical highs.

Major financial markets around the world.

Across Asia Pacific, Europe, and the Americas, Chinese capital, Japanese and Korean capital, Southeast Asian capital, European capital, Wall Street capital... have all focused their attention on the violently fluctuating and rapidly changing pound exchange rate market. They are all waiting for the referendum time to come, and they are also waiting for the most intense moment of this massive battle between bulls and bears to arrive.