"Oh my god! The 1.4000 point level was broken without any resistance from the bulls."
As the British pound exchange rate plummeted once again, hitting a new twenty-year low, someone among the countless speculators and investors gathered in the pound exchange rate market exclaimed in shock.
"It's a collapse, the 1.4000 point level couldn't hold, the bulls in the market are completely decimated."
"The situation of bulls liquidating other bulls has truly formed."
"Does this mean the outcome of this national referendum on Brexit will truly end in Brexit?"
"The number of people currently supporting Brexit is only about 250,000 more than those supporting Remain. This lead, as more voting results are announced from subsequent polling areas, logically... doesn't mean there's no chance of a reversal. How could the pound exchange rate not even hold the 1.4000 point level?"
"The bulls have fully abandoned their positions. In the entire market, besides active short selling orders, all are long position stop-loss orders."
"It has already fallen by more than 1000 points from the high at market open this morning. It's truly insane."
"This trend of the British pound exchange rate, is it already a 'black swan' event?"
"If the referendum result truly ends in Brexit, then it will definitely be a historical black swan event, and this event will have a profound impact on the direction of the global economy and the future world order."
"Sigh, I originally thought about buying the dip around the 1.4000 point level for a rebound, but I didn't expect... to be forced to stop loss again."
"At this time, speculating on a counter-trend rebound is extremely dangerous!"
"Have the bulls in the market entered a full stampede mode? The major institutions that shorted the market in advance this round have truly made a killing."
"Where is the Bank of England? The pound exchange rate has fallen to such a terrible state, aren't they going to protect the market and prop it up?"
"Exactly, I remember the Bank of England said before that they would strongly maintain the stability of the pound exchange rate. On the current market, there's no sign of the Bank of England intervening!"
"What are you thinking? With such one-sided emotional expectations and market trends, facing the stampeding bull principals in the market and the short principals aggressively forcing liquidation, with these two immense forces of long and short simultaneously venting, who would dare to strongly prop up the market? Isn't that courting death? Once this market trend has formed, no one can hold it up."
"Sigh, it's over, the 1.3900 point level won't hold either."
"Damn it, long orders opened around the 1.4300 point level can instantly get me liquidated."
"The bulls are gone. If it weren't for stop-loss, I would have been liquidated too."
"Holy crap, no way? I heard the Bank of England itself is also massively stopping losses and reducing its long positions in the pound exchange rate."
"Really? This news is too explosive."
"It's rumored in the market that after a massive drop of 1000 points, even the Bank of England couldn't hold on."
"Didn't the Bank of England claim to have nearly 400 billion US dollars in foreign exchange reserves? It's so easily unable to withstand stop losses? My goodness... the country's central bank has become a force driving down its own currency's exchange rate. How can the bulls in the market have any room to survive, how can they have any ability to reverse the market?"
"It seems to be news released by several media outlets under 'Aberdeen Asset'. Don't know if it's true?"
"Aberdeen Asset? Then the authenticity of this news might be questionable. After all, 'Aberdeen Asset' is a major short-selling institution in the current pound exchange rate market."
"But regardless of whether the news is true or false, since the market has collapsed, all long positions in hand must be liquidated."
"But market liquidity is declining across the board. At this point, wanting to stop loss and exit is not so easy."
"It's certainly not easy for the main bull institutions in the market to close positions and exit collectively, but for us retail investors, most of our orders are below 100 lots. Even if market liquidity is poor, it's very easy to stop loss or take profit in forex trading. The difficult ones right now... should be those large global capital institutions that previously aggressively advocated and went long on the pound exchange rate."
Just as everyone discussed...
When the pound exchange rate essentially fell below the 1.4000 point level, the last line of defense for the bulls, it triggered the ultimate stop-loss lines of many major bull institutions in the market.
Almost all bulls gathered in the market began to rapidly close positions and stop losses.
Many major bull institutions with position sizes exceeding 100,000 long lots, their fund managers, indeed became particularly panicked, just as everyone expected.
Among them, in London, UK, inside 'Pacific Capital'.
The cold sweat on hedge fund manager Yabuke's forehead had already seeped out, and in his heart, he had cursed the Bank of England countless times for violating previous market commitments and completely abandoning the pound exchange rate at the critical moment.
"Mr. Yabuke, what do we do now?"
As Yabuke was anxious, even furious, Flora, the trading team leader, asked urgently in the trading room.
Due to their institution's continuous increase in long positions above the 1.4000 point level, their fund suffered extremely heavy losses after the pound exchange rate broke through all support and fell below the 1.4000 point level.
At this moment, the floating loss figure for the hedge fund managed by Yabuke had already exceeded 3 billion US dollars.
This was an unprecedented huge loss for them, and this loss amount was rapidly expanding as they were unable to stop losses and exit instantly.
"What to do?" Yabuke gritted his teeth and said, "Stop loss, stop loss. At this moment, we only have one option: stop loss."
Since the Bank of England, the most steadfast bull in the market, had given up, there was no need for them to hold such massive long positions and bet on the referendum result or a market trend reversal.
Because when the referee doesn't think the game can be won, it's really hard for the bulls to win this long-short battle.
What's more...
Under the enormous floating losses, the fund's holdings had already triggered the mandatory stop-loss conditions under extreme risk situations.
In this situation, even if the subsequent market trend, market sentiment, and referendum results could reverse, to prevent the fund's losses from further drastically increasing, thereby further hitting the fund's mandatory liquidation line, he had no other choice but to issue a stop-loss and close position trading order.
"But at this time, all the bulls in the market are stampeding, coupled with the continuous forced liquidation by the main short institutions in the market," Flora said. "We simply cannot complete concentrated stop-loss and closing operations in a short period."
"We still have to stop loss," Yabuke said.
The fundamental logic for going long was gone, and the market stampede of bulls liquidating other bulls had formed.
According to trading discipline, no matter how much was lost, they had to stop loss.
Otherwise, if the pound exchange rate continued to collapse, triggering even more frantic extreme stop-loss stampedes, it was feared that all the funds of their entire fund product would be lost here.
Flora saw the cold sweat that had seeped out on Yabuke's forehead, as well as the rapidly declining pound exchange rate trend that still showed no resistance.
She nodded helplessly and could only quickly execute Yabuke's trading instructions, closing their long positions as quickly as possible to stop losses.
At the same time, at the moment 'Pacific Capital's' confidence in holding positions collapsed and they were forced to collectively stop loss.
In Wall Street, USA, inside 'Vanguard Capital'.
Inside the 'Huifeng Huanyu No. 1' hedge fund institution in Hong Kong City.
In Paris, France, the hedge fund trading department of 'BNP Paribas Investment Bank'.
Inside 'Mitsui Sumitomo Investment Company' in Hong Kong City, inside 'Tianhe Capital Company', inside 'Hashimoto Investment Company'...
Numerous major bull institutions worldwide, with positions exceeding 100,000 lots, were all performing the same operation: unconditionally stopping losses on their long positions.
Of course, at the same time.
In Wall Street, USA, inside 'Goldman Sachs Group', 'BNY Mellon', 'Blackstone Group', 'Citibank'.
In London, UK, 'Barclays Bank', 'UBS International'.
The investment trading department of 'Nomura Bank' in Tokyo.
'Huayin International', 'Huayi Capital', 'Aberdeen Asset Evolution No. 1' main hedge fund trading department in Hong Kong City...
A number of major short institutions in the market were basically also carrying out unified operations: seizing the market's unilateral sell-off, seizing the complete collapse of bull forces in the market, and seizing the fact that the number of people supporting Brexit still far exceeded those supporting Remain, to continue increasing their short positions and continuously force liquidation on the bull groups in the market who had not yet stopped losses and exited, or had not yet had time to close positions.
Among them, in the trading department of 'Huayi Chengyuan No. 1', the main fund product managed by Su Yi.
At this moment, the short position size held by this fund product had reached approximately 410,000 lots. Its average holding cost, compared to before, had increased to around the 1.4850 point level.
"General Su, our fund's floating profit has expanded to 4 billion US dollars."
As the fund's short position size and floating profit both significantly increased simultaneously, and its floating profit hit a new high, reaching the 4 billion US dollar mark, Qu Zecai, the trading team manager, reported with great excitement and enthusiasm.
"Good!"
Su Yi nodded slightly, his eyes still calm, and said,
"Since the pound exchange rate has fallen below the 1.3900 point level and essentially broken through the 1.4000 point level, our previous strategic plan objective has been initially achieved. At this position, there is no need to continue increasing short positions. A position size of 400,000 lots will already be difficult to close collectively later on. Continuing to increase short positions at this level is no longer cost-effective."
"Understood." Qu Zecai responded and quickly conveyed Su Yi's trading instructions to the various trading groups.
"The complete collapse of the bulls in the market should mean that profit-taking by short covering is not far off, right?"
After Su Yi finished issuing the trading instruction not to continue increasing short positions, Meng Shengfei from Huayin International's Investment Department Two said in the instant messaging interface,
"As the saying goes, if the bulls don't die, the shorts won't stop. Now the bulls in the market are rapidly perishing, it feels like it's almost time to take profit."
This was nearly another 400 points below his previous profit target.
And this 400-point decline added over 700 million US dollars in profit to the Investment Department Two he managed.
This also meant that in this round of investment in the pound exchange rate, their Investment Department Two alone had earned over 2 billion US dollars from the pound exchange rate market, from numerous bull institutions in the global capital market.
A profit scale of 2 billion US dollars!
This was basically the peak battle of his career.
Therefore, the strong desire to take profit that had been suppressed in his heart previously surged up again.
Su Yi nodded slightly and said,
"It's indeed almost time to enter the profit-taking stage, but it's only 9:43 at the moment, and a large portion of the referendum results from various districts have not yet been announced. At the same time, the number of people supporting Brexit has only exceeded those supporting Remain by about 300,000."
"In this situation, the expectation of Brexit has not yet materialized. If the expectation has not materialized, it means that many bulls in the market, especially retail bulls, still hold some hopeful sentiments. In the entire market's long position structure, retail bulls account for over 60%.
If this portion of retail bulls still harbors hopeful sentiments, it means that the selling momentum in the market has not yet been fully released. Once the expectation materializes, I estimate there will be another significant rapid decline in the pound exchange rate."
"In fact, from the perspective of expectations and sentiment, the pound exchange rate's audacious breakthrough of the 1.4000 point level, the ultimate defense line for the bulls, triggering a stampede and stop-loss among many major bull institutions in the market, was not primarily influenced by the referendum results at this time, but rather by the Bank of England's abandonment of the exchange rate and the Bank of England's liquidation and reduction of long positions. Of course, if you feel that subsequent news carries a lot of uncertainty, taking profit here is also quite perfect."
"Hmm, the uncertainty of subsequent news is indeed still very high," Meng Shengfei said. "And the pound exchange rate has already plummeted by 1000 points. The expectation of Brexit has been fully digested by the market. Even if the Brexit result comes out later, I feel it's possible that the negative news has landed, which might instead lead to a rebound in the pound exchange rate.
Relatively speaking... I still think it's more appropriate to concentrate on large-scale short covering and profit-taking now, while the short sentiment is strong and the bulls are completely stopping losses and closing positions, suppressing the market."
After speaking, Meng Shengfei immediately issued trading instructions for concentrated profit-taking and closing positions to the traders in the trading room without hesitation.
At this time, the market was entirely dominated by short-selling forces, so it was quite easy for him to close positions and cover for profit.
200,000 lots of short orders could be offset by covering long positions and closing positions within just tens of seconds or even one or two minutes, amid the venting of short forces.
And just as he issued the trading instruction to close positions and take profit, Kong Fansheng from Investment Department One of Huayin International thought it over and also made the strategic move of concentrated profit-taking and closing positions.
"General Su, thank you very much for this joint investment,"
Kong Fansheng said to Su Yi after issuing the profit-taking and closing position trading instruction.
"I hope we will have opportunities to cooperate again in the future."
"No problem," Su Yi smiled and responded.
He did not have much emotional fluctuation regarding their profit-taking and exit.
After all, with the strategy having reached this point, and the pound exchange rate trend having formed a unilateral situation of bulls liquidating other bulls, he no longer needed the massive capital of Huayin International to defend against strong counterattacks from the bulls in the market.
Furthermore, at this time, Huayin International's Investment Department One and Investment Department Two, he estimated that the two departments combined should have earned approximately 4 billion US dollars, nearly 30 billion Chinese Yuan, from the pound exchange rate market.
Such a massive profit scale would greatly strengthen his relationship with 'Huayin International', an institution with a very deep state-owned background.
It would also broaden his future path of development.
"'Huayin International' has already exited, and the pound exchange rate has fallen to around the 1.3800 point level. Is Mr. Su still not planning to take profit collectively at this position?"
After the two departments of 'Huayin International' exited, Frederick, the fund manager of 'Aberdeen Asset Evolution No. 1' main hedge fund product, said with a smile,
"Mr. Su, this round of operations should have earned you a lot. Do you really want to bite off more than you can chew and achieve your target of tens of billions of US dollars in floating profit on the pound exchange rate?"
(End of Chapter)