Chapter Seventy-Four: The Pain of Leverage

Since the Shanghai Composite Index reached a high of 5,178 points under the pursuit of leveraged funds, it is no longer able to attack under the bottom of the deleveraging policy. After a few days, it started a wave of tragic killing and falling after mid-June, and the so-called rose and fell rapidly.

In the face of this rare killing, Zuo Yuliang also experienced it for the first time in his stock trading career. After all, playing with leverage is also a new thing in the stock market, and he has never experienced it before. The so-called "no one thing, no one wisdom" is said to be this truth. There are so many new things in the stock market that people are overwhelmed.

Especially after entering July, the decline has become more rapid and tragic. The market can actually fall to the limit, and the disk is also a thousand shares to fall to the limit, and there is a green everywhere, and the retail investors who are covered just want to run, and in the face of thousands of orders on the fall limit, they have to look at the empty hurry, but they can't think of any way. Knowing that you are going to lose money, but you can't stop the loss, you say how sad this despair is.

"This is simply the funds in the lore field!" Zuo Yuliang couldn't help but sigh.

Zuo Yuliang: The Wuliangye where they built a position is actually a falling limit. The market continued to fall to the limit, and thousands of stocks fell to the limit, and the market was full of grief for a while.

"Call Liu Pengfei, let's see if there is something big negative in the policy! The market will produce such an extreme killing and falling market?" Zuo Yuliang said in a message.

"Take a look at a comment here: the main reason for the big drop is that the regulator clears the over-the-counter allocation, and then the capital market reacts quickly, giving a direct continuous drop limit, once it falls below the liquidation line, the allocation company will sell regardless of the cost, today the account falls below the safety line, the account is frozen at night, and the next day all stocks are shipped with a drop limit, which in turn drives more stocks to fall, and then more leveraged funds are forced to liquidate, and the cycle repeats, like a snowball rolling down from the top of the mountain, getting bigger and bigger, and finally evolving into an avalanche. This is an analysis of this market crash. Liu Pengfei sent a message and said.

"Does that mean that the manager has changed from the previous default leveraged funds to gradually clean up leveraged funds?" Zuo Yuliang asked.

"Yes, management has already started to clean up on-site and off-market allocations. Liu Pengfei sent a message and said.

"No wonder the market has plummeted! It turned out that it was a corner where funds were being dug up, but who could afford this huge gap in commitment? It's like a meteorite hitting the earth, causing a huge tsunami!" Zuo Yuliang said in a message.

"This kind of bullshit market, our hard-earned money, has turned into powder under the impact of this avalanche. Woo woo!" Li Ruyun sent a message to complain.

With everyone's panic, the stock index in early July was also like a kite with a broken line, continuously killing and falling, and thousands of shares fell in a row. Even Zuo Yuliang and their heavy Wuliangye also fell to the limit continuously, falling near the 240-day moving average in one breath.

Zuo Yuliang stared at the market for a whole day that day, and when he saw that the Wuliangye drop limit began to open, he immediately entrusted to buy the 30,000 shares he had thrown away before, and filled the Wuliangye position again.

"I'm full of Wuliangye on the fall limit. Do you want to follow up? I judge that there will be a strong rebound in this extreme downward method!" Zuo Yuliang was the first to send a message to the group after opening a position.

Thus, there is a scene where Zuo Yuliang has a conversation with his companions in the previous chapter.

Fortunately, the next day, Liu Pengfei sent a great piece of good news, and the national team began to enter the stadium to save the market.

"On the afternoon of July 4, the State Council held an emergency meeting, which was attended by the heads of the three committees, the Ministry of Finance, the State-owned Assets Supervision and Administration Commission, and major central enterprises, and then the IPO was suspended. The next evening, the China Securities Regulatory Commission released a pre-market news on Monday: Give full play to the role of China Securities Finance Co., Ltd. to maintain market stability, and the People's Bank of China will provide liquidity support. This is a very good policy today! Brother Zuo, you seem to have gone shit luck again!" Liu Pengfei said in a message.

Sure enough, after the market opened, the miracle happened again. On the same day, the Shanghai Composite Index soared, and individual stocks were also limited by 1,000 shares. After that, it was still a 1,000-share limit for three consecutive days, and the scene was unprecedentedly spectacular.

"Brother Zuo, Wuliangye is the third price limit, it seems that the order is not big, do you want to be out?" Hu Weiyong was the first to send a message and asked.

Since it is a bailout of the market, we have no choice but to close it when it is good, and the short-term moving average has gone bearish, so we cannot stay for a long time! For the sake of safety, I suggest that we throw away half of the position and continue the rotation of the half position to watch the market outlook. Zuo Yuliang sent a message and said.

"Okay, I've thrown it. Hu Weiyong sent a message and said.

"I also threw it away, hehehe, happy, it's really Jitailai!" Du Wenfeng also sent a message.

"Since it is a bailout, everyone must take the opportunity to reduce their positions and get out of the game, and they must understand the country's situation!" Zuo Yuliang sent a message and said.

"Brother Zuo, such a good up-limit trend, isn't it a bit early to throw away the chips in your hand?" Hu Weiyong asked again.

Moreover, the short-term moving average we are following has been short, and this rise should be regarded as a rebound by taking advantage of the good news, and a large killing and falling pattern has been formed, which cannot be reversed in a day or two. Moreover, once the deleveraging policy is launched, I don't know how many illegal funds will be cleared out? Zuo Yuliang sent a message and said.

"Then why doesn't Brother Zuo clear all his positions and get out? Wouldn't it be better to wait for it to fall down and then buy it?" Du Wenfeng said in a message.

"It's okay to do this way, but no one dares to guarantee that Wuliangye won't rise in the future! If it rises again, won't we be empty?" Zuo Yuliang explained.

"Well, it's still a safe point, you can attack when you advance, you can defend when you retreat, it's better. Hu Weiyong sent a message and said.

"From the point of view of the killing and falling waves, this is only a toss of a wave of killing and falling and two waves of rebound, and the road to killing and falling in the future is still very long! I advise you that the stocks in your hands can also take advantage of the rebound high point to get out. Cao Yinqiu sent a message and said.

"I agree with Yinqiu's statement, it is better for everyone to reduce their positions in the stocks in their hands. The next road to death will take at least three months. Zuo Yuliang sent a message and said.

"But this wave of slaughter has murdered a lot of leveraged funds! The middle class in the stock market is finished. Li Ruyun sent a message and said.

"Ruyun, you're talking about yourself, don't be discouraged, but you have to be careful when trading stocks in the future. Zuo Yuliang sent a message and said.

"I'm sad and want to cry without tears!" Li Ruyun said in a message.

"I'm the same, I've learned the impermanence of China's stock market!" Chen Menglong said.

"I'm not much better, I've lost hundreds of thousands of dollars in this wave of killing!" Zuo Yuliang also sent a message.

"Brother Zuo, you can only say that you have made hundreds of thousands of dollars less, and you can't call it a loss, but in fact, you still make a large profit! Liu Pengfei sent a message and said.

"This plunge even saved the market, it's really unprecedented!" Zuo Yuliang sighed.

"The SFC is starting to convey regulatory messages and reassure investor sentiment. At the same time, all levels of the country began to intensively introduce all kinds of good news, such as the central bank's double drop, pension into the market, insurance capital entry, etc., as if a year's good news has come out in a short period of time, known as "the 72-hour gold rescue of A shares."

This plunge is different from previous plunges in that it is a liquidity crisis caused by capital leverage, which has triggered widespread panic among investors, and the critical situation is extraordinary. If it is not leveraged funds, the market itself has a stable mechanism and will tend to balance, and under the influence of leveraged funds, the market will accelerate the decline and the stock market will stampede. In such a situation, the state must act decisively to guard against possible systemic risks. This is the official statement I heard about why the market should be bailed out in this round of killing, you can take a look. Liu Pengfei sent a message and said.

"It seems that the strength of this bailout is unprecedented, in other words, this kind of plunge our shareholders can't afford to hurt!" Cao Yinqiu said in a message.

"However, we still have to look at this round of bailout rationally, and we must be out of the game firmly, and we must choose stocks well, and stop speculating on all kinds of theme stocks with no performance. To be honest, although Wuliangye has also fallen to the limit, I have always been relatively stable in my heart, and I don't know why. Zuo Yuliang sent a message and said.

"Other theme stocks may fall more and more garbage, and Wuliangye is definitely more valuable the more it falls. Zuo Yuliang continued to send a message and said.

"Brother Zuo's words are very pertinent, and I agree with it. Hu Weiyong sent a message and said.

"It is true that Wuliangye was very strong when the market began to fall, unlike other theme stocks that fell without a bottom line. It seems that the bull market is heavy, and the bear market is heavy, there is still some reason!" Zuo Yuliang said in a message.

In other words, the reason why we keep losing money in stock trading is that we bought more inappropriate stocks at the wrong time, and as a result, we lost all our principal at an even more inappropriate time. Zuo Yuliang sent a message and continued to play.

This is another truth that Zuo Yuliang has realized in stock trading for so many years.

Buying stocks or being optimistic about high-quality companies is not wrong for foreigners.

It's a pity that few Chinese shareholders believe that even if this stock market crash, few people seriously reflect on it, and some are only temporary pain and temporary memory.