Chapter 50

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Protagonist:

Chen Yi

The good days of high-frequency trading didn't last many years.

But in 2003, high-frequency traders were still in the stage of quietly making a fortune.

This can completely be regarded as a game for smart people.

The mathematicians of Wall Street firms, costing tens of millions of dollars per year, were repaying shareholders in precisely this way.

It can be said that high-frequency trading is, in the history of stocks, in the history of futures trading, in the history of financial derivatives trading, the first time, a truly only-make-money-never-lose-money Secret Manual.

If the market is likened to a casino, then high-frequency trading is the undefeated Gambling God.

Its profit methods are very numerous, but generally speaking, it is just utilizing price spreads. The time of these spreads is measured in thousandths of a second, hundred-thousandths of a second, and the profit amount is often merely 1 cent.

However, the existence of spreads makes supercomputers and mainframes running millions of times per second excited like monkeys in heat.

The same stock, at a certain moment within an exchange, will have a price spread. Thus, profit.

The same future, between different exchanges, will have a price spread. Thus, profit.

The same order, the instant it is split into small orders, will also have a price spread. Thus, profit.

The smartest people in the world, 50 years after the invention of the computer, finally turned it into a money-making machine, turned it into a super money-printing machine.

Of course, any moneymachine has its obsolescence period; in 2003, it still possessed infinite vitality, even possessing a certain degree of praise.

For the Government, massive trading volume increased market vitality and economic liquidity; for the Exchanges, high-frequency trading enhanced their competition with other exchanges; for other traders, high-frequency trading bridged the spreads between both sides, lowering cost expenditures; for high-frequency traders, making money left no attention for hardship.

To attract high-frequency traders into their own exchanges, major stock exchanges including the New York Stock Exchange even gave them rebates — from a time-node perspective, it should be the stock exchanges' rebates that spawned high-frequency traders, and the latter in turn prompted the former to give more and more rebates.

As the world's largest exchange, the New York Stock Exchange's rebate figure was 13 cents per 100 shares, while CBSX's (Chicago Board Options Exchange Stock Exchange branch) rebate was as high as 19 cents.

Before the Government called a halt, large traders like GETCO conducting 1.5 billion shares daily, even if they didn't make money from the market, their rebate figures would exceed a million dollars.

Even those software enterprises, computer enterprises, all joined the ranks of high-frequency traders; they broadly marketed their products to major banks and various funds.

So, Chen Yi casually searched online and saw dozens of service providers offering corresponding software outsourcing; picking the famous ones to contact, he immediately received enthusiastic reception, with even two or three wanting to dispatch Broker Engineers for on-site service.

Amidst his surprise, Chen Yi couldn't help but consider things more comprehensively.

He first asked his mother for the name of a subordinate foundation — merely a title — and then followed the trail to inquire at the French branch.

Large software outsourcing profits are substantial; each company's enthusiasm is naturally directly proportional to it. Chen Yi first invited several companies by phone, and finally preliminarily selected Xinbiyou, which had numerous branches.

This is a relatively large American software service outsourcing company; the reason he valued them, besides their capability to complete the supercomputer software modification task, lay in their ability to accept relatively harsh conditions — for example, absolute confidentiality clauses, and long-term installment deferred payment.

Although many European and Asian companies could also provide similar clauses, considering the degree of adherence to contracts, Chen Yi's choice naturally had a bias.

After phone contact, they agreed to meet in Paris; Chen Yi continued handling College Entrance Examination affairs, while simultaneously chatting with old classmates.

The main point was confirming Luo Xiaoshan was safe and sound.

By the time these were done, it was already three days later.

Chen Yi lazily slept in, getting up around 12 o'clock, eating a fragrant breakfast at 14 o'clock, then taking money to go shopping on the street.

His main targets were perfume and natural plant essence; these things were pricey but lighter in weight, and although their cost-performance ratio was inferior to paper, they won out in time efficiency.

He purchased a whole suitcase of bottles and jars, and Chen Yi walked out under the envious gazes of a group of girls, heading to the Paper Supermarket in the suburbs.

The Supermarket's Boss He, long familiar with this young man of the Chen Family, laughed heartily upon seeing him: "This time you want some fresh ones, or another portion same as before?"

"This time I need you to research a bit." Chen Yi said, taking out a small notebook.

Every time he went to the Holy Qiao Kingdom, he would record the paper purchased, and the paper's final grading; after recording for so long, he had also figured out some patterns himself. But these patterns were ultimately relatively superficial patterns, not definite principles. As his consumption of Scrolls and Potions grew larger and larger, he not only wanted to increase paper purchasing power, but also wanted to increase the Holy Qiao Kingdom's strength.

Just as Timothy said, the Holy Qiao Kingdom on that Magic Continent was not the strongest country; they had enemies, their trade was Limited Use, their borders were blockaded.

If he wanted to obtain precious Scrolls like Skill Copying Scroll again, besides waiting for good luck, increasing their War Potential was a good choice.

"Let me see." Boss He, accustomed to Chen Yi's various strange requests, looked at the small notebook like reading a heavenly book.

"The very front is purchase time, after that is name, after that is its grading. Grading is defined by me; you look and see if you can find any Rules, or principles."

Boss He heard him say this; the notebook he understood, but the words he completely could not understand.

He said with a bitter face: "Mr. Chen, you aren't thinking of creating your own paper grading system, are you?"

"Anyway, just go by mine; you look at what price is needed, how long to produce it?" Chen Yi didn't explain at all; there are plenty of weird people in the world. Give the boss 10 heads, and he could think of a Cult organization at most.

"This..." Hearing there was money to be made, Boss He gritted his teeth: "For the sake of an old Customer's face, 10,000 bucks, I'll help you create a grading system."

Chen Yi directly took out a stack of Cash and gave it to him, then took out another stack and placed it on his side, saying: "Done before dinner, add another stack."

"Wait a moment while I check some books." The boss's daily profit absolutely didn't have 10,000 bucks; this time there was no more hesitation.

After a while, Boss He moved out several volumes, spread them open on the counter, copying and comparing one by one.

Although somewhat greedy for money, this boss himself actually had some real talent and learning, knowing quite a few things about paper.

Chen Yi bringing records here was also valuing the several pieces of equipment he had purchased — among businessmen, being able to spend money investing here was very difficult.

The suburban Paper Supermarket did wholesale business; the people coming were far fewer than an ordinary Supermarket. In hundreds of square meters of space, only the rustling sound of flipping books could be heard.

Chen Yi wandered around inside aimlessly, touching this for a bit, rubbing that for a bit, thinking wildly in his heart: If Timothy and the others came here, who knows, they might have to kneel and chant something.

Boss He suddenly went "Huh?".

"What is it?" Chen Yi, like a mouse with its tail on fire, whooshed over to the counter.

Only to see Boss He licking his lips saying: "Your classification actually has a bit of interest."

"Tell me about it?"

"First, the ones you marked as 0, those are all waste paper, and chemical additives and such are especially numerous, and it's not necessarily what Paper Pulp is used; Wood Pulp, Bamboo Pulp, Grass Pulp all mixed up messily." Boss He said, tapping on the tabletop: "The ones you classified as 1 to 3, chemical raw materials and such are fewer; generally they are all single Paper Pulp, or Bamboo Pulp, or Wood Pulp, Grass Pulp is still relatively few. These 4 to 6, need to check books."

"Mm-hmm, you speak." Chen Yi was devout like worshipping.

"The quantity of 4 to 6 is few; I looked closely, and the wood fibers are actually pure."

"What does that mean?"

"It means they're made from the same kind of tree, and the craftsmanship isn't bad either."

Chen Yi asked, not understanding: "Shouldn't the 'wood fibers' of all paper be the same? They're just wood fibers."

"Of course they wouldn't be the same." Boss He shook his head slightly and said: "Whether a factory buys wood pulp or makes its own, it's always many kinds of trees mixed together. If a small workshop buys raw materials casually on the market, or processes scraps, the origin could be anything from Canada to Indonesia. Also, you should note, what we commonly call broadleaf wood pulp and coniferous wood pulp includes countless subcategories — like oak, beech, birch — and each category can be further classified. Your papers marked 4, 5, and 6 are pretty much all single types, for example, all birch."

"Then what about grade 7?"

"Maybe it's made from the same tree?" After Boss He finished speaking, seeing Chen Yi's serious look, he had to wave his hand and say: "I was joking. I think, still, the wood for making paper is good."

The concept of good paper is truly too broad; Chen Yi widened his eyes and asked again.

Boss He simply acted as if he were instructing a student and explained carefully once through.

Actually, once understood it's simple: in the raw materials for making paper, those with shorter growth years are naturally cheapest. For example, grass pulp is cheaper than bamboo pulp, and the latter is cheaper than wood pulp.

In wood pulp, broadleaf forests grow faster, but fiber density is inferior to coniferous forests. However, in most raw material factories, limited by resource distribution, they won't waste time sorting out the same trees to throw into machines; instead, they dump them all in together in one go.

Boss He's procurement channels are wider; among them, some paper comes from small factories, and conversely the raw materials are easier to prepare, relatively purer.

And those papers that can be made into scrolls are first all relatively pure paper, and second, paper with more wood fibers — to understand it simply, it's just paper of a single type with longer growth years.

Understanding this point, Chen Yi listened to things like European birch, black cherry, beech wood, or Masson pine, and they sounded much more pleasing to the ear.

While flicking through the paper, Chen Yi said: "Boss He, then trouble you to prepare some more pure good paper for me; I'll take it all."

"Young Master Chen." Boss He's chubby face twisted, half-jokingly saying: "Paper from small factories also has grades; I truly don't know their materials. The numbers you marked aren't either — a few sheets got lucky, the raw materials happened to come together..."

When producing paper, raw material wood pulp is imported in units of ships; who can guarantee every sheet uses the same material, even pure certain wood. In fact, slightly cheaper paper doesn't necessarily use wood pulp at all; adding various compounds is only to be expected.

Chen Yi tilted his head and thought for a bit; it seemed indeed so.

But he had a new solution, and immediately smiled: "Boss He, then use the instruments in your backyard to run all these papers through; separate out the pure good ones, and I'll buy them at 10 times the normal price. Also, discuss with the factories you source from to specially produce a batch."

Boss He's bitter smile instantly stiffened; his head shook as if for three years, and he said: "Mr. Chen, this truly can't be done. Not to mention wasting the instruments, just the time can't be afforded — a batch of goods making you wait half a year, what would you do?"

"Then test in batches; every ream must have 4-6." Chen Yi held up four fingers: "Four times the price."

"Deal." For the sake of the price, Boss He said it and still laughed out loud.

Zhi Niao Tun: Today's second update, a solid 3500 words.