"Mr. Godfrey... I also think we should continue to close positions and stop losses, further reducing our long positions in the pound."
No sooner had Ernest finished speaking than Gerald, the head of the trading team, hastily added in the trading room,
"The current rapid rebound in the pound exchange rate is merely a technical rebound caused by short covering, not a trend reversal caused by news or fundamentals.
Once the profit-taking short covering is complete. At the same time, on the news front, the voting results from various districts further lean towards supporting Brexit. Then, it is feared that the pound exchange rate will face an even more brutal plunge.
Although there are still over 200 voting districts that have not announced the final referendum results, a gap of 200,000 people is already difficult to overcome. Mr. Ernest is right, under such extremely volatile market conditions, we cannot bet on low-probability events.
Furthermore, based on the previous two instances when the pound exchange rate plummeted. We found that under such a market trend with no buying interest, even if we were to carry out concentrated position covering at market price, it would be impossible.
Therefore, if we miss this good opportunity to close positions, cover, and reduce exposure again. If the subsequent market trend takes another sharp downturn, our fund might not even be able to stop losses and close positions."
"Alright!"
Seeing that both Ernest and Gerald said so, and both believed that they should decisively reduce positions and close them to stop losses, Godfrey hesitated for a moment, then finally nodded and said,
"Then, as you said, proceed with the corresponding stop-loss and position-closing operations."
The entire fund lost over 2 billion US dollars in this round of bullish pound exchange rate strategy.
Such a massive amount of loss.
It was the largest loss percentage in his career and the biggest blow to his confidence.
However, when he finally made the decision to close positions and stop losses after hesitating, his originally immense and agonizing emotional state surprisingly calmed down significantly.
Moreover, involuntarily...
In his mind, he began to recall the young man at the 'Huifeng Offline Investment Strategy Conference' who he had initially thought was ignorant of his own limits and had openly challenged him.
Only then did he suddenly realize.
It seemed as if the other party's provocation was meant to draw him in and make him heavily long on the pound exchange rate.
As Godfrey pondered, Gerald turned to the traders without any hesitation and issued trading instructions for concentrated position closing and stop loss.
And when the corresponding trading instructions were issued.
When a large number of long-close orders from the 'Huifeng Huanyu No. 1' main fund hit the pound exchange rate market.
The pound exchange rate, which had been enthusiastically rising and continuously breaking through resistance, suddenly paused, instantly slipping from the 1.4300 level to around 1.4260.
However, unlike the immediate stop-loss and error correction by the 'Huifeng Huanyu No. 1' main fund's trading department.
At this very moment, in Europe, the UK, London.
Jabuk, the main hedge fund product manager at the headquarters of 'Pacific Capital' Group, also a major long-side institution in the market, was still increasing positions in the opposite direction, firmly believing that the results of this national referendum would lean towards supporting remaining in the EU.
As for 'UBS International' and 'Barclays Bank', also in London, which had already shifted from long to short before the referendum day arrived.
The main hedge fund trading departments of these two major institutions.
Both Andrea and Claude were continuously adding new short positions in the pound exchange rate, preparing to recoup all the losses incurred from previous long positions.
In addition to these long-side institutions in the market, such as Japanese capital, Hong Kong capital, and European capital.
At this moment, on Wall Street.
Within 'Vanguard Capital', which had previously heavily bought into the pound exchange rate and held hundreds of thousands of long pound positions.
Cedric, the fund manager of the 'Amanda Hedge Fund' trading department, after thoroughly assessing the holding risk and the probability of the referendum results ultimately reversing.
Finally gritted his teeth, disregarding the huge unrealized loss exceeding 2.2 billion US dollars in the fund account.
Decisively made the decision to execute concentrated position cutting and covering.
And just as various long-side capital and major long-side institutions in the market were mostly reducing positions and stopping losses on rallies, or closing positions and stopping losses in a concentrated manner.
Numerous retail investors in the market.
While the pound exchange rate was rebounding due to massive short covering in the market.
Still held the belief that the referendum results might reverse, and that buying at the bottom now might be profitable, aggressively buying dips, continuing to take on positions, and continuing to open long positions in the pound exchange rate.
And as for both the main long and short forces in the entire market, as well as countless capital institutions, retail investors, and speculative funds globally.
The object of common focus.
Inside the Bank of England at this moment, including the Bank of England Foreign Exchange Market Department, after an emergency Monetary Policy Committee resolution.
The leaders reluctantly abandoned their previous support plan, cut down the large number of long positions established earlier, and prepared to let the pound exchange rate freefall during the announcement of the referendum results.
Then, after completely clearing out both long and short chips, they would re-enter the market to support and maintain the pound exchange rate.
After all, at this time, with market sentiment completely biased towards the short side.
Insisting on going long to maintain the stability of the pound exchange rate.
Was too costly and a waste of funds.
Of course, the most fundamental reason for everyone to abandon the previous support strategy was that under such sentiment and market conditions, no matter how much money was invested to maintain the exchange rate trend and to absorb market sell-offs, it would not have much effect.
They could not absorb all the short orders in the market.
Nor could they rely solely on US dollar foreign exchange reserves to hedge against all the short-selling forces in the market.
Moreover, compared to the central banks of other major countries.
Their central bank's US dollar foreign exchange reserves were not abundant.
If they were to easily play this trump card now, then Wall Street capital's subsequent further shorting of the pound exchange rate would become even more reckless, and the pound exchange rate trend after the referendum would face a more brutal situation.
By then...
What might be affected would not just be the exchange rate or the forex market results.
It could be said that the entire UK's national economy, and even all financial institutions within the UK, as well as national wealth, would be plundered by countless short-selling capital and would face immeasurable losses.
Therefore, regarding the extreme systemic financial risk that was highly likely to occur after playing their trump card.
The main leaders of the Bank of England, after careful consideration, finally made the decision to completely abandon the pound exchange rate at this time.
And due to the Bank of England's intervention methods, which were lower than market expectations at this time, and its strategic decision to completely abandon support.
This directly led to more and more major long-side institutions in the global capital market losing confidence and rapidly cutting losses and covering positions as market trading time progressed.
"Mr. Su, the long and short positions in the market have decreased by almost 500,000 lots within the past half hour."
Noticing that a significant portion of the outstanding long and short positions in the market had been covered, and also observing that the pound exchange rate seemed to struggle to break above the 1.4300 level, Qu Zecai, the fund trading manager in the 'Huayi Chengyuan No. 1' main fund trading room at Huayi Capital Company in Hong Kong City, quickly reported.
Su Yi nodded slightly, responding,
"The outstanding long and short positions are decreasing significantly, indicating strong short and covering by both short and long positions in the market, which is as expected."
"A large amount of short-term bearish capital, as well as speculative short-term funds, should have completed quite a few profit-taking and covering operations in the past half hour," Qu Zecai paused, then continued, "As for the main long-side forces in the market, it's estimated that they have also stopped losses and cut positions significantly."
"Hmm."
Su Yi nodded slightly, then turned his gaze to the instant messaging interface, asking Frederick, who was coordinating with his own institution,
"Mr. Frederick, are there any important latest updates from the UK or Wall Street?"
In terms of market intelligence and information acquisition channels.
As a newly established institution, they simply couldn't compare with global capital giants like 'Aberdeen Asset'.
Therefore, after the two major institutions began coordinating operations.
Su Yi had always asked Frederick for the latest market news.
Frederick chuckled and replied,
"The referendum results from each district are broadcast live with real-time ballot opening and counting on TV networks, so our institution doesn't have much more information than Mr. Su in that regard. As for the Bank of England, no further news has emerged yet, but Wall Street... their actions are getting bigger and bigger. Just now, 'Vanguard Capital's' 'Amanda Hedge Fund' has carried out concentrated position closing and stop-loss operations."
"We can't let these big institutions in the market exit calmly after stopping losses,"
Su Yi said hastily upon hearing Frederick's news about Wall Street,
"As long as the longs don't die, the shorts won't stop. These major long-side institutions holding massive long positions are a potentially huge short-selling force in the current situation.
To further seize exorbitant market profits, and to enable these major long-side institutions to create greater profit margins for us. We cannot let them exit safely at this point. Currently, it appears that the short-term short-sellers in the market have mostly taken profits.
Coupled with market news, especially the referendum data from various districts, which continues to favor Brexit, this provides us with sufficient impetus to continue shorting, and for the pound exchange rate to continue falling..."
Hearing Su Yi's words, Frederick, without waiting for Su Yi to finish, quickly asked in surprise,
"Listening to Mr. Su... does this mean you want to continue shorting on a large scale?"
"That's exactly what I mean."
A sharp gleam flashed in Su Yi's eyes.
"Mr. Frederick, you wouldn't be satisfied with just over 2 billion US dollars in profit, would you? If this battle... can take over 10 billion US dollars in profit from the pound exchange rate market, I believe this battle today will become the most brilliant investment achievement and the most glorious moment in Mr. Frederick's career."
"Profits in the tens of billions of US dollars?"
Frederick, upon hearing this figure, was startled, even though he considered himself to have seen major storms before.
Su Yi smiled and nodded, saying,
"If we use our profits to continue investing large sums of money to short and squeeze the longs, leveraging the market's already fragile long sentiment, the overwhelmingly bearish mood, and the continuously expanding advantage in the number of people supporting Brexit, I believe it's not impossible for us to achieve this feat."
"No, Mr. Su... didn't you say before that using unrealized profits to increase positions is an extremely dangerous act in forex trading?"
Hearing their conversation, Meng Shengfei, who now only had one-third of his short positions left, hastily asked,
"Why are you proposing such an extremely dangerous strategy now?"
Su Yi replied,
"Indeed, using unrealized profits to increase positions is a very dangerous trading behavior in forex trading, but in the face of an excellent opportunity, especially when we have already seized control of the market, I believe this dangerous action is still worth betting on."
"Betting over 2 billion US dollars in profit on uncertain future outcomes?" Meng Shengfei thought Su Yi was truly insane.
Su Yi chuckled and said,
"This event of the UK's national referendum on Brexit is not only a huge gamble for us, but also for the country itself, and even for the numerous long and short capital giants participating in this round of the pound exchange rate market. Since it's a huge gamble, when the odds are in my favor, there's nothing to be afraid of betting on."
"Haha..." Frederick couldn't help but burst out laughing upon hearing this, saying, "Mr. Su's vision is truly admirable. Alright... I'll gamble this hand with you."
Having said that, Frederick immediately prepared to instruct the trading teams in the trading room.
To use the massive unrealized profits in the accounts to continue heavily shorting the pound exchange rate.
Su Yi's gaze was sharp as he swept over the pound exchange rate, which had completely lost its strong rebound momentum and was oscillating downwards again.
He hastily added,
"Besides continuing to invest massive funds to short the market for suppression, I also need Mr. Frederick to leverage 'Aberdeen Asset's' influence and Mr. Frederick's network on Wall Street to publicly and vigorously spread the news to the market that 'the Bank of England has abandoned the pound exchange rate'."
"Heh heh, alright!" Frederick replied, "Mr. Su's strategy is truly ruthless. The combination of market trends and news, further leveraging the news that 'the Bank of England has abandoned the exchange rate,' will completely dismantle the underlying logic and confidence of the market's long positions. This way, the longs in the market will truly lose all hope.
As long as the subsequent referendum results from the voting districts can maintain a corresponding advantage for those supporting Brexit.
Then, the approximately 3 million lots of long positions currently trapped in the market will truly have nowhere to escape, facing a fate of continuous panic stop-losses and even successive forced liquidations."
Su Yi smiled and said,
"We need to make the longs in the market completely despair and create a brutal self-inflicted stampede. Only then... can the pound exchange rate market form an even more extreme trend, and only then can we seize even more substantial profits from the market. Today... many people, many major long-side institutions, are destined to go bankrupt!"
(End of Chapter)