Chapter 76: Wall Street Is a Xuanhuan World

Late at night, the Computer Center of the University of Wisconsin was still busy.

The Review Committee's schedule did not care whether the user found it convenient; their primary concern was whether the supercomputer was convenient.

The long design and construction cycle, world-class technology and price—a supercomputer was as precious as a warship; everyone's time and work arrangements had to accommodate it.

When Chen Rongxi began installing software, all data was quietly hidden within the running weather data, with traffic measured in gigabytes per second, making its hard drive flicker like a warning light, yet attracting no one's attention.

The Computer Center always had a humming noise that disturbed people's peace of mind.

A researcher doing data work had a worried expression, sipping coffee, and muttered there: "Overtime work in the early morning is the most boring; the speed is too slow."

A computer expert monitoring nearby looked and said: "Add two more sets of CPUs."

He said so and immediately got to work.

Supercomputers like "Siren" belonged to upgradeable cabinet structures; in a room as large as a plaza, countless metal cabinets two meters high were placed, containing processors, hard drives, memory, and so on.

When needed, the staff responsible only had to plug power cables and data cables into the metal cabinets to increase its performance.

This was already a fairly common design; besides increasing the lifespan of thousands of various parts of the supercomputer, it also served to save electricity—any computer center's annual electricity bill was a figure that made one spit blood.

Now, upon discovering that "Siren's" computing needs had increased, the staff thought nothing of it, first adding two sets of processors, then another six sets.

Different computing methods, computing content, even the erosion of time could all cause "Siren's" performance to decline; no one knew that at this moment "Siren" was busy conducting tests of "Lightning Trading."

"Lightning Trading" had been suspected by all parties since the day it was born. It was typical front-running, like a violating broker who, upon receiving a client order to buy a certain stock at no more than ten dollars, first buys it himself at 9.7, then sells it to his own client at ten dollars, thus cheating out 0.3 dollars.

The difference was that Lightning Trading did not even need to violate rules to harm clients; it harmed all retail investors, and its advantage came from super-advanced equipment, relative to the time difference of exchange equipment.

For example, the OptiMark Trading System of the Pacific Options Exchange used supercomputers that were already leading products among major exchanges, but still lagged behind "Siren"; even so, its trading system had to simultaneously bear millions of user commands per second, the result being that after simultaneously receiving trading commands, the equivalent supercomputer could see market information about 0.3 seconds in advance.

It was like being able to foresee the future 0.3 seconds.

This was a fantasy event occurring in the real world, caused by technology.

Central Standard Time, 3 AM, "Siren's" computing power gradually recovered.

The administrator drank coffee without realizing anything, too lazy to even get up and turn off the extra CPUs.

Far away on the other side of Earth, Chen Yi and his little sister slapped their hands hard, celebrating the successful installation of the "Lightning Trading" program, the first round of tests successful.

"If you want to watch the trading, just go to sleep." Chen Yi did not avoid his little sister, only instructing: "Regarding computer matters, no one can say anything, not even Mom."

"Understood." The little sister showed the firm expression of a Young Pioneers Squadron Leader.

Chen Yi looked at his watch, while contacting Tang Xiongfei on the computer, and said: "We have a 13-hour time difference with New York, that is around 8:30 PM, when trading begins."

Chen Rongxi had no objection, but Tang Xiongfei on the American side cautiously asked: "Mr. Chen, I only hired one trader here, and there seems to be only 100,000 dollars in the account."

"One is enough; let's first use that 100,000 dollars to practice." Chen Yi was short of money; where did he have extra money?

Tang Xiongfei blinked and agreed, and after closing the computer, he simply could not figure it out. 100,000 dollars—what could be done in the New York stock market? Let alone using a supercomputer; that thing's daily rent was surely more than 100,000 dollars.

Chen Yi didn't care about him; he returned to his room and fell asleep as soon as his head hit the pillow.

When the alarm rang, he drank Energy Recovery Potion as if taking drugs, then slowly opened his computer.

The little sister quietly pushed the door open, sneaking in with her notebook, suppressing her excitement: "Second Brother, are you really going to trade stocks on Nasdaq?"

"We can go to all stock exchanges in the United States." Chen Yi was actually excited too, but he pretended to be calm: "Wait until we have more funds, then go to the futures market; it's a sure-win transaction anyway."

The little sister nodded like pounding rice: "If we lose, it's because the French software has a problem."

While speaking, she had already connected to "Siren" through a zombie computer.

The trader on the American side had to first link to her computer, then link to the zombie computer and Siren.

Such a method would inevitably slow down the originally advantageous speed; switching to a minimum-requirement mainframe would naturally be at a great disadvantage, but for a supercomputer at the level of "Siren," processing batch exchange information took less than 0.1 seconds, plus about 0.1 seconds of transmission time, which was more than enough relative to the 0.3 seconds of advance time.

In fact, the reason countless investment banks placed supercomputers under Wall Street was ostensibly to compete for shorter transmission times, but in reality to reduce costs.

They could not spend hundreds of millions or even billions of dollars to buy the most advanced supercomputer; as businessmen, their final choice was a supercomputer that could process trading information within 0.25 seconds, or even 0.27 seconds, and for every 0.01 second saved on communication fiber, they could save several million dollars in fixed capital investment.

Compared with this, Wall Street's high land prices were nothing at all.

Chen Yi reviewed knowledge about supercomputers while opening software made by OptiMark; here, there was not much for him to handle—besides entering amounts, bank accounts, and a few company details, most of it was just watching the computer's performance.

To succeed in the millisecond battle, the software itself would do its best to resist human intervention.

This was simply a technological war.

Eastern Time 9:30 AM, fresh and hot 100,000 dollars of capital began to join the world gamble centered on New York.

Here, everyone thought they were the strongest and smartest player.

Most of them wanted to get rich through intelligence, and most failed; a minority wanted to rely on capital appreciation, and a minority failed; an extreme minority wanted to profit from insider trading, and an extreme minority failed.

And today in 2003, those who knew how to use supercomputers, and those who could afford supercomputers, were definitely a minority among the extreme minority.

At such a time, the power of capital had already been diluted by supercomputers. Or rather, the supercomputer itself represented capital.

"Control Siren's computing volume; be careful not to exceed the warning line." Chen Yi stared at the screen and said to his little sister.

Chen Rongxi crackled on the keyboard: "The software has a function to automatically select remaining time slots; occupying 15% total should not be discovered. Is it enough?"

"A total of 100,000 dollars is more than enough." Chen Yi boasted: "Others have several billion dollars, plus a hundred times bank leverage; how much do we have? Add 200 times leverage."

"200 times?" But Tang Xiongfei in the three-person conversation exclaimed in a high decibel in the United States; he seemed to explain in a persuading tone: "200 times leverage means borrowing 20 million dollars from the bank to gamble; if the market fluctuates 0.5%, we will all be forcibly liquidated..."

So-called leverage meant using one's own money as the bank's margin, with the bank paying the speculative capital. But if a loss occurred, the bank would demand additional margin. If the latter's amount was less than the loss, the bank would automatically sell all your speculative products to stop losses.

Most of the time, this was a win-win situation.

Likewise, it was a design of genius.

"We won't lose a single cent." Chen Yi said coldly: "We see market fluctuations 0.3 seconds earlier than the market."

Tang Xiongfei was nearly speechless, thinking of a way while squeezing out a sentence: "Where is there a sure-win gamble?"

"For American stock investors it's gambling; for us... it's tax collection." Chen Yi paused, then said: "Speed up."

"Yes." Tang Xiongfei didn't even care to say more, and hurriedly began contacting various banks.

Their capital was too small; to use more money, they had to endure stricter review and agree to harsher conditions. Conversely, the eternal snobs always liked to chase those who didn't want to borrow money to lend them money.

The financial world was like a circle of biting tails; everyone wanted to bite a piece of meat off the person in front's buttocks, but didn't care that their own buttocks were being licked back and forth.

Half an hour later, Tang Xiongfei tried every method before obtaining 200 times leverage from Mellon National Bank. This was only because the other party, seeing they had successfully used 50 times leverage consecutively, allowed it to proceed.

And within just half an hour, Gold Source International, using 5 million dollars obtained with only 50 times leverage as bait, had already completed 70,000 shares of transactions consecutively, earning 15,000 dollars itself.

This speed was faster than most Wall Street brokerage firms, and its return rate was far greater.

If the advantage of the latter's massive funds were also counted, the "Siren," ranked tenth in the world, could surpass almost all brokerage firms' supercomputers with just about one-third of its idle time.

This was actually quite natural. Being ranked in the top ten in the world meant cross-era computers that spared no cost. Compared to them, the IBM models favored by Wall Street brokerage firms were often mature mid-range goods, with a difference far from being just a little bit.

After Tang Xiongfei finished his call and returned, he looked at the numbers in the account again and was simply dumbfounded, unable to help but say: "My heavens, when I contacted Mellon, I still dared not confirm—did we really earn fifteen thousand dollars in half an hour? Is it too fast?"

Everyone was still in the state of a conference call, and Chen Yi gave a faint "en," saying: "Not just that number, Tang Xiongfei, go contact all the dealers right now and have them cash out our rebates. If you don't ask for this kind of thing, they won't speak up. Also, 200 times leverage is settled, use it immediately."

Tang Xiongfei came back to his senses as if just awakened, promised, and hurriedly began operating the network again.

Major exchanges determined rebate amounts based on dealers' trading volume—this was actually also to attract more brokers to focus on this exchange—Gold Source International's current scale was still small, and could only get the lowest public figure, roughly between 0.05 cents and 0.29 cents per share.

This was a figure that could be directly applied for with a certain trading volume.

To get a higher price, like those large high-frequency traders, one had to negotiate specially with the exchange.

According to the current exchange rate, 0.05 cents was roughly 0.4 pennies, sounding very little, but corresponding to the term "high-frequency," accumulated day by day it was also quite considerable.

If Chen Yi's 100,000 dollars maintained a trading volume of 150,000 shares every hour, then he could receive over 10,000 dollars in rebates a day, which was a daily return of over 10% more than usury—and risk-free, with calculable compound interest.

Of course, in reality, at market opening and closing, trading was most frequent and the spread was largest, while trading speed was slower at other times. Also, normal small brokerage firms were constrained by insufficient high-tech equipment, while large brokerage firms were constrained by insufficient market opportunities.

Compared with it, the existence of the "Siren" was like an unsolvable bug. Its calculation power was so powerful, while the amount operated was so small. Then, the larger arbitrage opportunities encountered in the market were destined to be eaten by it first.

Even if the amount operated continued to increase, with the required calculation power, it would still be the dominant force in high-frequency trading.

In this era when high-frequency trading was just beginning to flourish, investors who could not see the direction were even still using mainframes to trade, how could they be opponents of the Siren?

The funds in the account rapidly gathered.

When Tang Xiongfei finalized the automatic payment agreement and came back with a pitiful 2,000 dollars, the numbers in the account actually increased by 20,000.

He calculated the six-digit number for half a day, but said indignantly: "Too unfair, the money earned in this one hour is higher than my annual salary."

"If you want a raise, go get a bigger leverage."

Chen Rongxi said with a clicking tongue: "With 200 times leverage, we have 3.3 million... now it's 3.7 million dollars, still increase?"

Although she was the Chen Family Heiress, she had never seen an account of over 40 million RMB.

"Have you played the game of Big Fish Eat Small Fish?" Chen Yi patted her head, saying: "In the pool of Wall Street, with a supercomputer, we are the protagonists. Higher leverage will only add more food."

Besides word count: today's second update is here. May Day Double Monthly Ticket Day, don't forget to vote for Struggling Pig.