"I'm ready to go long on cotton futures. In the VIP room at Goldman Sachs' headquarters in New York, Abel said to John Smith, "Can you help me? Mr. Smith." ”

"Speculation in futures?"

John Smith pondered for a moment, considered his words, and whispered, "Mr. Sephorosa." I can understand futures speculation, after all, the futures market is the second largest financial speculation market after the stock market. But why do you fall in love with cotton? Cotton, a commodity, tends to be very stable, with fluctuations of no more than 500 points a year. ”

In fact, the various commodities in futures are in addition to gold and oil, which are two more important core products. Most commodity futures tend to fluctuate not very violently, except for special markets, there are few one-time fluctuations of more than 100 points.

Like the fluctuation of tomorrow's cotton futures that Abel found in the small wrecking ball, it is a special market situation.

40.69 cents/lb rose to 46.08 cents/lb, which is exaggerated enough to reach an exaggerated 539 points.

The profit of 539 points, if it is exactly according to this value, the profit of a lot of cotton futures is as high as 5390 US dollars!

In the face of John Smith's kind reminder, Abel smiled and said: "I have checked a lot of newspapers and quotes, and I believe that this is an opportunity, an opportunity to get rich." So I'm ready to invest, and it's that simple. ”

"Uh......" John Smith was a little speechless, looking at Abel's confident appearance in his chest, he wanted to persuade him again.

Because he has seen too many such speculators, read some stock quotes, read some newspaper materials, and feel that the victory is in hand, and hurriedly enter the market.

In the end, they often lose money.

"Don't owe me anything. Abel saw his hesitation and took the initiative to say, "I'm sure." ”

Abel himself said so.

What else could John Smith do?

He had no choice but to smile wryly and say, "Of course it's no problem." Mr. Sephorosa, the money is yours and you can invest it however you want. ”

"That's cotton!

"Okay. How much money do you want to invest and how do you want to do it?"

"Let's invest $50 million first!

"Uh......" John Smith's eyes lit up first, because Abel was ready to invest $50 million, which was arguably the highest investment he had ever received in his career.

He's done it before.

Most of them are only between hundreds of thousands of dollars and one or two million dollars, and occasionally there are only a few millions of dollars. As of today, the highest amount of money he has ever handled is only about $30 million.

Abel 50 million at a time.

He was very excited so that he could earn a lot of fees and spreads.

But Abel's later remark about using the highest leverage made him stunned again

"What's wrong again?"

"Mr. Sephorosa. He tentatively asked, "Do you really invest $50 million, do you really use the highest leverage, do you know what the highest leverage ratio is?"

"50 times?" 100 times?"

"Uh......" Seeing Abel's relaxed appearance, John Smith couldn't help but swallow a few mouthfuls of saliva and water, and said slowly: "This depends on the platform." According to the level of the industry, the highest leverage you say is 400 times......"

400 times so much?!

Abel was a little surprised.

He did not check the information in this regard. He knows some leverage multiples in foreign exchange, and if you speculate in foreign exchange, the leverage multiples range from 10 times to countless times.

It's the first time I've heard that the leverage ratio of futures speculation is so high.

He thought so.

The little wrecking ball flew out very intimately, reflecting some information in his mind.

Originally...... Before the 2008 financial crisis, the New York Stock Exchange and the U.S. compliant futures companies provided futures leverage multipliers of 400 times. It was only after the 2008 financial crisis that a series of policies were introduced to suppress this multiple to less than 200 times.

And since 2008 onwards.

The leverage multiple for shorting U.S. stocks has also been reduced from the current most exaggerated figure of 500 times to a maximum of 50 times.

So.

Now John Smith's statement of up to 400x leverage should be true.

But if you really use 400 times leverage, it's no different from gambling. What does 400 times leverage mean? It means that if you fluctuate a few points, Abel's principal loss will reach the level of 10 million.

If it fluctuates by a dozen pips.

It is estimated that his principal of $50 million can disappear all at once.

Although it is certain that there will be this wave of market tomorrow, the probability is very high at least 85%, but after all, it is not a prediction, and some fluctuations or accidents in the middle may also occur.

Most importantly.

Although the impact of my little butterfly on the world is still very small, what if it may affect cotton?

Be cautious.

Abel decided to make less money, and he was not a real gambler, so there was no need to take such a big risk.

"400 times is an exaggeration. 100 times, 100 times leverage, do $50 million cotton futures. Abel thought about it for a while, but decided to give it a hold and said with a smile.

"Uh-......huh," John Smith smiled bitterly and explained in a depressed whisper, "Mr. Sephorosa." To be honest, Goldman Sachs can only offer you around 10x to 20x leverage. Those platforms that are more than 20 times more than 20 times do have, but they are all some split-capital companies. We don't do such high multiples......"

Abel frowned.

So much more?

John Smith went on to explain: "There are ...... Basically, futures with more than 50 times leverage only accept funds below $1 million. Your $50 million should be spread into long positions, and you can achieve this multiple with a very complex method. With a one-time investment of more than 50 million US dollars, unless there is a company willing to sign a VAM contract with you, there are really few companies that will provide multiples of more than 20 times. ”

Sounds a bit complicated.

Abel didn't do enough homework.

20x leverage is too little.

But looking at John Smith's statement, it seems that this is the highest multiple that those large formal investment banks and financial futures companies can offer.

Unless he is willing to spend a long time to build a position, by opening more than a hundred leather bag companies, to slowly collect and build his own positions, can he enjoy such a high multiple.

But apparently, Abel did not have such time and did not have such energy.

$50 million.

20x leverage.

It's pretty much it.

No man is content.

"Twenty times then. Abel finally said.

John Smith was also relieved to see Abel reduce the multiple, and he immediately responded with a smile: "Although the higher the risk, the higher the gain." But if the risk is high to a certain level, the return becomes a bit ethereal. Mr. Sephorosa, you made the right decision!"

He'll breathe a sigh of relief.

It's because if Abel raises the leverage to 4 or more than 20 times, John Smith can't operate for Abel.

"$50 million 20x leverage. This amount of funds, in cotton futures, is still a large amount, which is likely to cause market volatility and attract the attention of big shorts. They will definitely not let you go, and to be honest, stand in the shoes of a stockbroker who thinks about their clients. ”

"Mr. Sephorosa.

"The risk of your investment this time is very high. It's so high that a little bit of wind and grass can make you lose your ......."

"So be it. I've decided. ”

"Okay......"