Facing the GBP exchange rate once again crossing the 1.5200 level.
And simultaneously facing the continuously expanding position loss of 'Huayi Chengyuan No. 1' main hedge fund.
Even though trading team manager Qu Zecai had foreseen this trend before the market opened, he still frowned visibly at this moment.
"Mr. Su, our position loss has expanded to approximately 200 million US dollars again,"
Qu Zecai reported.
Su Yi nodded slightly and replied,
"Don't worry about the position loss. Just continue trading according to our original plan. The short squeeze by the longs is strong. When the GBP exchange rate rises sharply, we can add some new short positions.
Then, when the GBP exchange rate briefly oscillates downwards, close the newly added short positions. In short… we can now implement grid trading while maintaining our current dynamic position balance."
"Understood, Mr. Su."
Qu Zecai nodded.
He then turned around and conveyed Su Yi's trading instructions to the company's traders.
And with the traders' operations…
In the subsequent trading hours, amidst the continuous weakening of short forces and the continuous entry of long funds causing a short squeeze, the GBP exchange rate continued to break upwards, following an oscillating upward trend.
By the end of the Asian trading session, the GBP exchange rate had reached a high of 1.5220.
By the end of the European trading session, the GBP exchange rate had essentially recovered all retracements after the 'UK national referendum on Brexit' proposal passed, returning to the short-term high of 1.5240.
Then, as time entered the more intense US trading session.
The GBP exchange rate once again experienced a volatile trading pattern, oscillating within the range of 1.5210 to 1.5240.
Throughout the entire day's trend.
'Huayi Chengyuan No. 1' main hedge fund product managed by Su Yi.
All the company's traders, following his instructions to maintain the overall total position unchanged, continuously conducted grid trading by selling high and closing low, gradually reducing the fund's overall position loss.
However, no matter what form of operation Su Yi used.
With the continuous upward breakthrough of the GBP exchange rate, the overall loss of 'Huayi Chengyuan No. 1' fund product's nearly 100 million US dollars in short positions still showed an expanding trend.
Moreover, as the losses of the hedge fund product he managed continued to expand.
In the global financial market.
Countless investors and numerous forex investment institutions had expectations for the GBP exchange rate trend and predictions for the 'UK national referendum on Brexit' result that were entirely biased towards the long direction, showing complete consistency.
In the entire global forex financial market, very few people recognized the potential risks existing in the GBP exchange rate market.
Also, very few people believed that the UK would actually leave the EU.
After all, in everyone's ingrained perception, from the moment the EU was established, the UK had been an extremely important member state of the EU.
Moreover, whether analyzed from macroeconomics or future development directions.
Or from political impact.
Remaining within the EU system was always the best choice for the UK.
Therefore, Su Yi's full commitment to shorting the GBP exchange rate using 'Huayi Chengyuan No. 1' main hedge fund product, and his failure to reduce positions, cover to cut losses, or exit with large-scale stop-loss despite incurring huge losses, made many people believe he had lost his head, become mentally disoriented, and was acting like a gambler with bloodshot eyes.
"What is the current position of 'Huayi Chengyuan No. 1', this main short fund?"
Seeing the GBP exchange rate return to the 1.5240 level, and all the long positions that his 'Huifeng Huanyu No. 1' hedge fund product had invested in the GBP exchange rate market were now profitable, Godfrey, the hedge fund manager, asked in the trading room of the 'Huifeng Global Asset Management Huanyu No. 1' fund product trading department in Hong Kong.
Hearing Godfrey's question, trader Gerald replied,
"According to market intelligence, the short position holdings in the GBP exchange rate market have significantly decreased compared to last Friday, and net long positions continue to increase substantially. At the same time, the short position holdings in the associated trading accounts of 'Huayi Chengyuan No. 1', which is the main short, seem to have not only not decreased but have increased quite a bit."
"Instead, they increased quite a bit?"
Godfrey thought he had misheard.
Gerald nodded and continued,
"According to the information we obtained from 'FXCM International', this institution is indeed continuing to increase its short positions."
Godfrey said,
"He's truly insane, Mr. Su of 'Huayi Capital' is clearly a gambler!"
Gerald said,
"It is indeed surprising. Almost all long position holding institutions in the market were waiting for this guy to close out his positions with a large-scale stop-loss. Unexpectedly… not only did he not reduce or close his positions with a stop-loss, but he continued to increase his positions, aiming to recover previous unrealized losses from a potential pullback in the GBP exchange rate by increasing positions at high levels."
Godfrey said,
"Heh heh, increasing positions at high levels means that once the GBP exchange rate continues to break upwards, his position losses will also multiply. How much capital does this person roughly still have available?"
Gerald said,
"According to market intelligence, this person's total liquid capital should be around 500 to 600 million US dollars. Currently, this guy's short positions, according to our information statistics, are almost 100 million US dollars, and his unrealized losses on his positions are approaching 200 million US dollars.
Calculating it this way… The liquid capital he can currently use should be around 200 to 300 million US dollars."
"200 to 300 million US dollars?"
Godfrey pondered for a moment and said,
"So, if the GBP exchange rate is highly likely to break further upwards past 1.5500, this guy will almost certainly be liquidated?"
Gerald said,
"According to the market intelligence we've obtained, that's about right."
Godfrey said,
"There's still a range of about 300 basis points. It seems Mr. Su can't escape the fate of liquidation. Continue to increase long positions. The GBP exchange rate will definitely break through the 1.5500 barrier within a week, forcing Mr. Su to exit with a large-scale stop-loss and close his positions."
"Should we continue to open new long positions using unrealized gains?"
Gerald asked.
Godfrey nodded and said,
"Yes, there's no reason not to continue participating in such a good short-squeeze opportunity."
"Understood."
Gerald nodded in agreement.
Immediately, he continued to instruct the traders behind him to increase their long position holdings, joining other investors who were long in the market to short-squeeze 'Huayi Chengyuan No. 1' hedge fund, the big short.
And almost simultaneously…
While long institutions globally continued to short-squeeze and go long on the GBP exchange rate, and continued to spread rumors to influence market sentiment.
Domestically, in hot money circles.
Many of the hot money funds that had entered the market to short the GBP exchange rate with Su Yi last week were already feeling utterly depressed.
"Damn it, the GBP exchange rate can still rise! If it rises any further… Brother Su might not be liquidated, but I'll be liquidated first."
Among them, in the 'Modu Ultra-Short Group' main hot money chat group, where Su Yi was, Xu Qiao, who had invested a considerable amount of capital in the GBP exchange rate market, couldn't help but complain.
"This trend of the GBP exchange rate is basically a one-sided upward movement,"
Old Zhang, who was also suffering heavy losses, responded in the group.
"Could it be that this time… Brother Su really made a wrong judgment?"
Xu Qiao said,
"With such high leverage, once the position direction is wrong, it's really unbearable. I only opened a 100,000 USD short position, and in just a few days, I've lost over 200,000 USD. Double the loss, this risk… it truly can't be compared to the stock market."
Old Zhang nodded and replied,
"Indeed, I wonder how Brother Su's psychological fortitude manages to withstand this?"
"Brother Su's current position losses are probably already over 200 million US dollars, aren't they?"
Old Wu also chimed in at this moment.
"In the GBP exchange rate market, if these long institutions continue this short squeeze, I feel that even if Brother Su has more capital, he might not be able to hold on while waiting for a reversal in the GBP exchange rate trend."
Xu Qiao said,
"Sigh, I, for one, can't see where the hope for a reversal lies. I just have a feeling that this wave, the GBP exchange rate will continue to break above 1.5500."
Old Zhang interjected, saying,
"Didn't the British Cabinet just release the 'national referendum on Brexit' proposal document? And didn't they say the Brexit procedures have already been initiated? These news items should, strictly speaking, be bearish for the GBP exchange rate. How come the GBP exchange rate trend is instead moving in the opposite direction, pushing higher?"
Brother Chen replied,
"The factors influencing currency exchange rate trends are far more numerous and complex than we imagine, and the players in this market are also much more formidable than we all think. Even major central banks get involved. It's truly difficult to accurately grasp currency exchange rate movements, so… making a wrong direction and incurring losses is actually quite normal. The trading risk in this market is inherently very high."
"Is Brother Chen not optimistic about Brother Su?"
Xu Qiao asked.
Brother Chen replied,
"It's not that I'm not optimistic. It's that, given the current situation, the predicament Brother Su faces is indeed very dangerous. Looking at the GBP exchange rate trend, regardless of market news or fundamentals, it's clear that these long institutions in the market are trying to use their capital advantage to force Brother Su to massively cut losses and cover positions, or to liquidate and exit."
"These institutions that use their capital advantage to short-squeeze are truly despicable,"
Old Zhang cursed.
Old Wu said,
"The rules of the financial market are inherently dictated by capital. Everyone invests real money and operates according to their own understanding, so one can't really call them despicable.
For example, when we operate in the stock market, don't we also use our capital advantage to guide market sentiment and entice retail investors to follow the trend and go long? These Western institutions are currently using the same tactic to exploit Brother Su."
Brother Chen replied,
"It's not just exploiting Brother Su. It should be said that they are exploiting all the shorts in the market. After all, forex and futures markets are zero-sum games. In the entire GBP exchange rate market, besides the large number of short positions held by Brother Su, other funds also hold quite a few short positions.
As long as these short positions can be forced to cover and close, further stimulating the rise of the GBP exchange rate, then these long institutions conducting the short squeeze will be able to make huge profits."
"A zero-sum game under high leverage is truly treacherous at every step,"
Xu Qiao sighed.
Old Zhang replied,
"It's not just treacherous at every step; every moment is a thrilling life-or-death test."
Old Wu said,
"However, Brother Su's call this time has led many people domestically to switch to the forex market, and now they are all suffering huge losses. This might be a blow to Brother Su's reputation and public image in China.
Moreover, most people, unable to withstand the losses, will eventually stop-loss and cover their positions, which will indirectly provide further impetus to the longs in the market. It feels like… Brother Su's current situation is truly dangerous.
Once the shorts in the market start stopping losses and covering positions, the GBP exchange rate's upward speed will accelerate, and the short squeeze by these long institutions will become even fiercer."
"The key is, at this point, even if one wanted to withdraw, it would be very difficult, wouldn't it?"
Xu Qiao said.
Brother Chen said,
"Cutting losses and exiting should still be possible. However, based on my understanding of Brother Su, he would absolutely not stop-loss, close positions, and exit until the very last moment when he is truly powerless to reverse the situation.
Because, as this matter has developed, for Brother Su, it's no longer just a matter of a 200 million US dollar loss; it also concerns the reputation of the entire 'Huayi Capital' that he manages, and its future development prospects."
Old Wu said,
"Indeed. In this battle, Brother Su has truly staked everything."
Old Zhang said,
"But we've been talking for a long time, and currently, we are powerless. In the GBP exchange rate market, the long and short position holdings have already reached million-level volume. Our small positions won't even make a ripple; they can't influence anything at all."
Brother Chen said,
"We can only rely on Brother Su himself. I hope the market can take a turn for the better!"
Unfortunately…
While everyone's wishes were good, the market trend became increasingly brutal.
After continuous oscillation, on Tuesday, June 7th, net long positions continued to increase in the GBP exchange rate market.
Simultaneously, the GBP exchange rate also continued its upward breakthrough, crossing the 1.5260 level in one fell swoop, setting a new exchange rate high for the past three months.
Moreover, long positions in the GBP exchange rate market continued to increase.
And when 90% of institutions globally were strongly bullish on the GBP exchange rate, widely believing that the outcome of the 'national referendum on Brexit' on June 23rd would result in a zero probability of Brexit.
The Bank of England also once again conducted market operations, selling off a significant amount of US dollars.
Following the Bank of England's public market operations.
The GBP exchange rate continued to surge upwards, approaching the 1.5300 level in less than 24 hours.
Facing the continuous rapid breakthrough of the GBP exchange rate.
The position loss of 'Huayi Chengyuan No. 1' hedge fund product managed by Su Yi directly advanced towards a loss of 260 million US dollars.
At the same time, his available liquid capital rapidly decreased.
And at this moment, as the longs were making huge profits and countless hearts were surging with excitement.
The posts Su Yi published on domestic and international investor forums also drew countless mockery, and even many domestic investors who had previously followed his lead to short the GBP exchange rate began to have doubts about him after incurring huge losses.
Almost in the blink of an eye.
The legend Su Yi had created and the image he had built in the domestic stock market had all collapsed.
Countless people began to question his investment ability.
Countless domestic and international institutions, as well as the capital that Su Yi had previously exploited in the financial market, and numerous opportunistic speculators, all began kicking him while he was down, either criticizing him in the mainstream media or flooding into the GBP exchange rate market to short-squeeze as counterparties, hoping to share the scraps of this great long-led short-squeeze battle.
(End of Chapter)