What is the underlying rationale for Soros’s hedging approach to short a country? The deepest analysis of the whole network

Most of the books on dealers on the market are wrong. They simply regard the dealer’s method as raising the price to allow the follower to pick up the book to achieve the purpose of shipping. Such “silly dealers” actually do not exist.

Not many people can explain the process of Soros’s attack on the British pound, the baht, and the baht. Many people simply think that Soros is blindly shorting the market with huge funds, and he just smashes the market, so the short order is profitable-if it is true So simple, anyone can be Soros. Most people still don’t understand the underlying logic of hedge fund hedging. This article starts from the underlying logic and shows you how Soros can hedge himself in any situation. in an undefeated position.

獨立觀點】加密貨幣投資者該跟億萬富翁索羅斯學一件事| 動區動趨-最具影響力的區塊鏈媒體(比特幣, 加密貨幣)

It can be said that all bookmakers make profits by hedging in the spot and forward markets.

However, it is also hedging. The gameplay and logic in the foreign exchange, commodities, and precious metal markets are completely different from the gameplay and logic in the stock market. Because the former is divided into the spot and futures markets for hedging, which are two separate markets with two different disks, and the scale of funds is completely different; while the latter stock market hedging is buying stocks and short selling securities. In the same plate, the same plate is shared, and the specific performance of such differences will be explained in detail later.

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Here we first discuss the former foreign exchange, commodities, and precious metals market maker hedging methods, because it is easier to understand. After understanding it, it is much easier to talk about the process of Soros’s attack on the British pound, the Thai baht, and the Hong Kong dollar.

For ease of understanding, let me take Bitcoin as an example. If you want to be a bookmaker, it is very simple for you to control the market. As long as you have enough funds, you can buy 99% of the bitcoins in the spot market. At this time, 99% of the bitcoins are equivalent to “freezing” in your hands. There is only 1% of the circulating order left, so you can raise the price as high as you want, because most of the selling orders in the spot market can only be in your hands, because the total order in the spot market is limited , you hold 99% of the bitcoin, as long as you don’t sell it, basically there will be no selling in the market, and you only need to spend a little money, and you can make the transaction price as high as you want.

Because the formation principle of the time-sharing trend of capital market prices is the line formed by the average transaction price that occurs every minute, and it has nothing to do with the transaction volume. If the original bitcoin price is 1,000 yuan, and all the bitcoins in the spot market are in your hands, you place a sell order at 10,000 yuan, and then take out 10,000 yuan to buy it yourself, then you can see the time-sharing trend of bitcoin. The price rose from 1,000 yuan to 10,000 yuan, an instant 10-fold increase.

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If you look at it this way, it seems that you only used 10,000 yuan to increase your total assets by 10 times. However, even if you don’t have eggs, you can push the transaction price even higher in the spot market time-sharing trend, pulling it to 100 million yuan. Either way, it’s just a floating profit on the disk. If you want to achieve real profit, you must sell all the bitcoins you have to cash out, which is considered a real profit.

That’s the problem. When you are trying to clear out all the bitcoins at the price of 10,000 yuan, you find that no one takes the order, and no one wants to buy it. What should you do? If you sell it blindly, you will only smash it like crazy. Didn’t make much money in the end.

So the correct way is this: in the process of pulling up, open a short order at a high price in the futures market to achieve hedging.

First of all, the price rise and fall of the futures market is an independent market and disk, and it is different from the limited disk of the spot market. Its circulating disk can be unlimited. As long as someone is placing a long order or a short order, there are If another fund competes with him, then its circulating market can expand indefinitely. Moreover, the price trend of the futures market can be different from the spot price, or even go in the opposite direction within a certain period of time, but in the end it will return to the spot price.

(For more basic knowledge of futures, I suggest that you go to the textbook and read it. I won’t go into it here, but it is very important. If you rush into the financial market without understanding futures, you will be cannon fodder.)

The futures market is leveraged. If it is 10 times leveraged, then the amount of capital you need to build a short order only needs to be 1/10 of the total capital you bought bitcoin in the spot market. While building a short order, continue to raise the price of Bitcoin in the spot market – why do you want to do this, just to ensure that the cost price of your short order is as high as possible, when you do this, no other retail investors dare Go short, only dare to go long, so that your short order is not afraid of not having an opponent at this price. If someone dares to go short and compete with you, you can continue to increase the spot price and make their short orders explode.

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Once the short order in the futures market is completed, the layout is complete. At this time, you can boldly sell bitcoins in the spot market to cash out. At this time, if no one takes the order, the price of Bitcoin will plummet from 10,000 blocks, and at this time, the futures market will generally follow the decline-because the spot price begins to fall, opening the distance from the futures price, and some people must choose to go short. , or the original long-order option to stop loss and close the position (and long-order close-out is to short), even if no one is really short after 10,000 steps, then no one will dare to go long. At this time, you are in the futures market. It is possible to short the price with a small amount of capital to hit the low price.

In this way, as a bookmaker, you can basically make a steady profit, because even if you don’t make any money in the cash market process because the transaction price keeps falling, you are short in the futures market, so you make a lot of money in the futures market. In the process of falling futures market prices, gradually liquidate positions and take profits.

——And closing a short position in the futures market is to go long, and it forms a hedge with short selling in the spot market. We can call it a hedge liquidation.