The Son of Finance of the Great Age

  Chapter 187 Breaking the deadlock

  In fact, there are quite a few investors in the market who hold the same views as Jerry. Everyone is waiting for the liquidation of the bulls. Most of them have the idea of ​​fishing in troubled waters and want to take a bite of the bulls.

On Thursday, October 27th, the price of copper futures opened at US$2651. After a day of trading, it finally closed at US$2644. The intraday price reached as high as US$2688 and as low as US$2627. Narrow, long and short sides have no intention of fierce fighting, this day can be called calm.

On October 28th, Friday, the price of copper futures opened higher at $2,680, which was nearly $40 higher than the closing price of the previous trading day. The signs of bulls pulling up were very obvious, and this price immediately attracted the attention of the market , Some analysts even announced directly on TV that today's copper price is likely to reach a high of $2,700. Infected by this kind of optimism, ordinary investors began to enter the market to do long, but as soon as they entered the market, they found that the upward pressure was very strong, and it took several minutes for almost every price change. They thought it was the bears who were desperately resisting, but when the copper price rose to 2688 US dollars and began to stagnate, they discovered that most of the transactions in the market were long exchanges, rather than double openings or double closings.

   These people were deceived by the illusion that the main force of the bulls was pulling up! Although this market is operated 24 hours a day, the most important trading time and trading volume are still concentrated in the daytime in the UK. The main bulls can easily raise the price of copper to a high level through small operations at other times, and then trade at a high level. Put on an upward attack posture, instigate a follow-up plate to enter the market, and then take the opportunity to close the position.

  Wait until the follow-up market reacted, the bulls have successfully sold out hundreds of long positions. Although this number is not large, because the main force of the bulls has already raised the price to a high level, there is enough price left for them to gradually close their positions.

On the short side, when seeing such a high price of copper futures, the first reaction is that the bulls are aggressive and want to break through 2,700 US dollars today. Not sure to resist the bull's offensive. But soon, they discovered that the market trend was not as they had imagined. The rise in copper futures prices was weak, and according to the feedback from brokers, the trading volume was not very large, and the main short sellers quickly realized that this was The bull's bluff and dark tactics.

   Therefore, except for a few short sellers who liquidated part of their positions due to excessive shock, the main short sellers did not make much action. The market quickly changed direction, and copper prices began to fall after a brief rise.

   "Zhong Sheng, the bulls are weak, should we make a move?" Andrew saw the price of copper fell, and quickly asked Zhong Shi beside him.

Although he was forced to leave the market by the main bulls in the first two trading days and stopped the behavior of backing the bottom, he then gave up this more conspicuous operation method and started to use ultra-small transactions such as a few hands or dozens of hands per transaction. The number of lots quietly absorbs contracts with expiration dates in November and December in the market. The advantage of this operation method is that it does not attract much attention, but the disadvantage is also obvious, that is, the trading volume throughout the day is very small, and it cannot reach To Zhongshi's psychological expectations.

After two trading days, Zhong Shi only absorbed more than 500 long positions. This made Zhong Shi feel very uncomfortable. pleasure. But he also knew that this was because he entered the field late, so he had to do so.

Zhong Shi stared at the positive line on the computer screen, hesitated for a long time before saying: "No! The current price is too high, which is not conducive to our absorption, and the trading volume does not seem to be very large. If we enter the market rashly, I'm afraid it will draw attention."

  Although Andrew does not fully agree with Zhong Shi's point of view, he has long been used to letting Zhong Shi control the direction. Now that Zhong Shi has said so, he can only give up.

  The price of copper futures quickly fell back to the opening price of 2680 US dollars, stayed at this position for about ten minutes, and then dropped to the low level again.

   "Did you see it? The bulls are ready to repeat their tricks!" Zhong Shi nodded, pointing to the real-time quotes on the computer and said to Andrew.

   "Hmm... what repetition strategy?" There is no ready-made English translation of the idiom repeating the old trick. Zhong Shi used a free translation of the repetition strategy, which made Andrew react for a long time, and then asked in confusion.

Because of the relationship in London, the traders of Tianyu Fund all trade with each other in English. Hong Kong is a place with a high degree of internationalization. Several traders have a high level of English, and Ann Pitt does not understand it at all. Chinese, in order to prevent him from feeling a sense of distance, Zhong Shi always uses English when communicating with them.

Zhong Shi pointed to the K-line chart that had turned into an inverted T-line on the computer and said lightly: "The explanation in the textbook of this shape is that the seller is reluctant to sell, but combined with the transaction situation just now, it is easy to see that if it is not for the bulls Take advantage of the opportunity to close positions and create pressure on the price rise, or the shorts block the bulls' upward offensive and form a signal for a downward counterattack. In short, both of these situations will make the subsequent trend bearish, we will just wait and see. "

  Although Zhong Shi’s words are convincing, these traders have experienced many battles and have seen a lot. Which situation in the copper futures market have they not seen? However, they don't have such a brilliant record as Zhong Shi. They used 300 million U.S. dollars to gain 200 million U.S. dollars in half a year, and Zhong Shi is the one who has the final decision. Therefore, even if they are as confused as Andrew just now, they will I had to suppress the doubts in my heart.

It didn't take long before they had to admire Zhongshi's keen sense of the market. The price of copper futures fell one price after another, and began to decline slowly after around $2675. At this time, short sellers began to enter the market, and bulls also began to accelerate their liquidation , The two sides initially formed a short-handed handover situation.

The intention of the bulls has been seen through by the bears, so the bears make targeted operations, that is, open a new short position with a small amount at a high position, forcing the bulls who want to close their positions to follow up, otherwise there will be a lack of liquidity at a high position, and the follow-up market will also be lost. If you are unwilling to enter the market, then there is no possibility of trading.

For this strategy of the bears, the bulls have become extremely passive because they have not fully mobilized their enthusiasm to follow suit, but they cannot raise the copper price again. This is exactly the opposite of their strategy of closing positions, and they can only let them positions are increasing.

  The market is in a stalemate!

   "What should I do?" Seeing this situation, Andrew asked anxiously.

  Zhong Shi shook his head helplessly and remained silent for a long time. For this situation, he didn't have a good solution for a while, because first, he didn't know the low price that the bulls could accept to close their positions, and second, he didn't know which position the bears were going to force the bulls to. Well, both sides may target him.

  After thinking for a long time, Zhong Shi finally gritted his teeth and made a decision that surprised everyone: "Use other accounts to open a short position with a lot size of 500."

  Short? The first reaction of Andrew and the traders was that they heard it wrong, and then they saw the serious expression on Zhong Shi's face, as if he had said something wrong or was joking, and then they realized that Zhong Shi was serious. After several people looked at each other, Andrew still asked: "Zhong Sheng, our strategy has always been to go long, why are we going short now? Isn't this flatting out your own position?"

   "No, I am not trying to close my position, but to break the current situation, I want to be a market maker!" Zhong Shi denied.

"Market Maker?" Andrew bowed his head and thought for a long time, but he still didn't understand what the word had to do with Zhong Shi's order. Four traders set to work.

  Market maker, this term refers to an institution that actively operates in the market in order to expand the influence and liquidity of the market. Generally, this role is assumed by a securities firm with market maker qualifications. Among them, a capable securities firm can even expand the number of contract transactions in a market by several times.

  Although Zhong Shi used the word market maker, his role at this time obviously cannot be compared with that of traditional market makers. At most, he only temporarily changed the trading conditions of the market. When a 500-lot market entrusted empty order appeared in the market, it immediately broke the current situation maintained by the two sides. The bulls who were originally planning to close their positions were preparing to play the trick of changing their left hand for their right hand. They planned to exchange positions in different accounts, resulting in market transactions. The false appearance of increasing volume, and then gradually throw the position to the small investors who entered the market, but before they took action, a large empty order suddenly appeared in the market.

The price of copper futures subsequently fell to US$2,665, and the contracts of the two parties and the small investors who were ready to fish in troubled waters were wiped out. This sudden change gave investors the impression that the main short sellers entered the market and suppressed Copper futures prices. Faced with this sudden change, both the bulls and the bears reacted quickly. The bulls began to throw out a medium amount of liquidation orders. Although the bears did not understand who was suppressing the price of copper futures, they saw the bulls liquidate their positions, which made the price of copper futures go further. After the fall, they began to wait and see, making copper prices fall even more sharply.

  Short positions do not close old positions, nor do they close new positions, making the liquidity of the market worse again. Zhongshi had to sell 500 lots of short positions again, which once again suppressed the price of copper futures, and the price fell to 2650 US dollars, which was close to the expectations of the short sellers. After waiting for a while, the short sellers began to tentatively throw out some of the liquidation orders of the old positions.

  Zhong Shi took the opportunity to close the first 1,000 short positions at this position, and then opened new positions in November and December at the price he thought was low. Since both long and short positions need old positions, the price of copper had to be stabilized, so Zhongshi took the opportunity to absorb a lot of long positions at the position of 2650 US dollars.

  Finally, this day closed at $2,644, the same as the previous day, and the trading volume was only 70,000 lots. Most of this was due to the frequent trading of small investors, and some long positions still needed to be closed!

   Thank you very much for the monthly ticket support from book friend napoleon! Also thanks to Aline for the review vote!

  (end of this chapter)