Chapter 79: Only I Have the Unique Method Chapter 79: Monopoly Exchange

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Protagonist:

Chen Yi

The ultimate goal of merchants is to pursue profit.

This is most fully demonstrated in high-frequency trading.

Every supercomputer, or mainframe, has an arbitrage strategy preset by someone. How much price difference to buy first, how large a fluctuation to choose to enter or give up, and most importantly, the stop loss order—a line set by investment institutions to place uncontrollable losses.

Once it falls below this line, the computer will immediately sell the certificate of deposit, ensuring losses remain within a certain range.

Although arbitrage strategies vary endlessly, one great principle never changes: pursuing maximum profit while reducing risk as much as possible.

Specifically in high-frequency trading, it means being the first to find two orders with a large price difference and completing the entry and exit process in an instant.

Merrill Lynch's Investment Department does the same.

However, when all investment institutions stare at the same exchange, conflict inevitably occurs.

Whoever discovers first, whoever completes the arbitrage transaction first, naturally becomes the most important thing.

Today in 2003, high-frequency trading, still developing, had not yet entered an era of full competition, because the market was so large, and the number of high-frequency traders was so few, further limited by still underdeveloped computers and their systems, competition proceeded in a gentle, silent manner.

Whoever has faster computing speed, whoever has faster transmission speed, whoever snatches the order first, gets it.

In the past few months, Merrill Lynch Investment Department, newly entering this field, had not encountered too strong an opponent. They sometimes missed some opportunities, but overall it was satisfactory.

So Minister Mr. first brought Catherine and them to see the latest technology, Wall Street's recognized future development direction.

Who would have thought that within just a few minutes, three mainframes with a total value of nearly ten million US dollars would make mistakes one after another.

Except for a small number of white orders executed, blue orders were almost pitifully few.

The most were all orange.

A screen full of orange, like a leaking big orange.

The Minister didn't bother to wipe his sweat, plopped down onto his seat, and began checking the trading records. The more he checked, the more alarmed he became, and the continuously increasing list made him even more anxious.

Catherine didn't understand, chased into the office, and asked: "No deal is no deal, what does it matter?"

"High-frequency trading relies on the number of transactions." The Minister could barely speak, and after a long while said: "The other side is always ahead of us, snapping up profitable orders. If this continues, we will definitely be firmly stepped on by them."

This is also the only way current high-frequency traders compete.

It's just that before, no high-frequency trader's speed was ever this fast.

"Are the Traders that useless?" Catherine was referring to the Georgian she valued.

"It's not his problem." The Minister said while muttering to himself: "Shouldn't be."

"What's wrong?"

"Their reaction time is too fast, and it's not just order-taking speed. I checked Nasdaq's Colocation Service, they're not there... it's more like analysis speed is fast—what a good computer that would be..."

Mark suggested: "Could it be their software strategy is good?"

The Minister immediately perked up, thinking Catherine wasn't always useless, and asked: "How so?"

"I'm not too sure, but I consider, computers are so expensive, but if using a very good strategy can deceive you and monopolize business alone... maybe it's just a few geniuses' thoughts..."

Mark actually wasn't as clueless about computers as he appeared.

In fact, he had once studied finance at ease in Germany for two years, then was dispatched to the United States to complete the Holy See's layout in the financial market.

So although he made a suggestion, he couldn't say too much.

The Minister was somewhat disappointed and looked back at the screen.

Mark, however, believed his own judgment quite a bit, pretended to go to the Wei Sheng Jian, and inside secretly inquired of the Holy See.

For humans on Earth, Wall Street influences everyone. Even villagers in remote poor mountainous areas who have never left their County are also exploited by them, let alone the huge Holy See Organization.

The numbers on the screen continued to refresh.

Just like Gold Source International's Account.

The proportion of orange gradually expanded, until covering all colors on the screen.

The Minister decisively made a decision and gave up: "Exit the New York Stock Exchange, now."

"We still have 270,000 orders not sold." The Trader immediately roared. Since the orange screen-flooded, some of their originally certain arbitrage orders were also stuck in hand because the other side snatched them first.

For high-frequency traders, this is simply the most terrible disaster.

"Stop loss." The Minister finished speaking and plopped down onto the Chair.

At least five minutes later, he let out a "hah" and bitterly smiled: "Catherine, you've seen a joke. Today we probably lost at least 500,000 US Dollars."

The loss being so small is thanks to high-frequency trading's low risk. Unless the market fluctuates against common sense, it will naturally bring low risk per transaction because of low profit per transaction.

The Minister had fought on Wall Street for many years; despite losing composure, he quickly adjusted his Mood. Compared to the loss, the decision to exit the New York Stock Exchange was more significant. Tomorrow's Board of Directors meeting would probably have corresponding questions raised.

Catherine was surprised, but smiled and comforted: "You earn the company so much money every year; a small accident is normal."

The words sounded nice. In her mind, she indeed didn't take 500,000 US Dollars to heart—it was just the price of a yacht.

The Minister seemed to regain strength, nodding heavily: "One order held for over 15 seconds carries huge risk. Market opportunities pass in an instant, and arbitrage opportunities are the same."

He tapped the name Gold Source International on the screen and said: "They're going to clean out the New York Stock Exchange."

"Clean out?"

"With their speed, they can probably do a hand change every 10 seconds now." The Minister shook his head and laughed: "I think they're focusing on the New York Stock Exchange. As long as they maintain today's state without mistakes, we'll all be orange."

"Doesn't the Exchange manage it?"

"Wait and see. Those politicians—tomorrow we can't wait." The Minister finished speaking and roared: "Today first do Nasdaq. Tom, go talk to Chicago. We enter tomorrow."

The Traders continued to busy themselves.

The Minister stared at the Car ECU, occasionally checking something.

Mark casually walked behind him and saw that the content inside was indeed Gold Source International.

High-Frequency Traders were not mysterious figures; they had corresponding filings at the Exchange, as well as varying amounts of information. Banks collected more comprehensive data, even including the company's daily financial status, but such information was not easy to obtain.

Although in the eyes of most Chinese people, earning one million US dollars a day would make one want to hide on Mars to avoid discovery, on Wall Street there were plenty of Traders earning one million US dollars a day, let alone Bosses and Institutions.

Mathematical geniuses graduating from Yale and MIT looked stupidly like common brain-dead people, but the various financial derivatives they invented every year brought considerable profits to the entire Market, and of course brought themselves tens of millions in salary returns.

In this world piled up with gold, information was both the most valuable and the most worthless thing.

About ten minutes later, the Georgia boy shouted loudly: "Sir, trading strategy changed, prioritize Nasdaq, lower New York Stock Exchange six priority levels, switch in ten seconds, nine seconds, eight seconds……"

"Let me see." The Minister closed the Gold Source International page, closed his eyes to calm down for a moment, then continued looking at the newly changed trading strategy.

"Seven seconds, six seconds……" The Georgia boy was still counting; when racing against time, unless they received a clear termination order, they would not waste a single bit of time.

The Minister remained silent the whole time.

Counting down to zero, the Traders were nervous for a moment, then relaxed again.

Next came the matter of the Car ECU.

What they had to do was react quickly when the Car ECU encountered things outside the mathematical model, just like before.

The orange on the big screen was gradually brushed away, becoming less and less until it disappeared, and some beautiful Blue Crystals began to appear, making everyone happy.

Seeing the Minister's expression remained serious, Mark couldn't help but ask: "Are you worried they will also enter Nasdaq?"

"They will definitely enter." The Minister had no ill will toward him, pointing at the screen: "Their bank is Mellon National Bank, x Leverage, estimated own capital isn't high; at the current rate of increase, hmph."

Mark suddenly understood and asked: "Sir, what do you estimate their total funds in the Market to be?"

Although he had studied finance for two years, he certainly couldn't compare to the old Traders at Merrill Lynch.

"Between two hundred million and one point five billion." The Minister gave a very broad figure, due to the issue of fund utilization.

However, for them, the difference between two hundred million and one point five billion wasn't big. Calculated at x Leverage, it was only seven hundred fifty thousand to five million six hundred thousand.

Mark immediately concluded: "Is it a newly established small company?"

"That's not small at all. The Supercomputers they use are worth who knows how many tens of millions, maybe even over one hundred million US dollars." The Minister laughed like a small lobster, his messy hair moving in the air like claws.

Hearing over one hundred million US dollars, Mark's eyelid twitched.

He glanced at Catherine teasing the Georgia boy and said in a fast and light tone: "Then if they have one hundred million US dollars, wouldn't they be able to sweep New York?"

"Enough to sweep North America." After saying this, the Minister picked up the phone: "Excuse me, I need to talk to the people at Mellon Bank."

As the Investment Department of a bank, obtaining inside information was almost an open secret.

Mark left with a smile, but his mind was in turmoil.

A Supercomputer worth one hundred million US dollars mixed with five million six hundred thousand US dollars of capital; he naturally arrived at a conclusion—there was no such thing as a one hundred million US dollar Supercomputer; it must be some small company that invented some special trading strategy, just like High-Frequency Trading was invented.

If Gold Source International were some famous investment bank, Mark might think such trading strategies applied only to small amounts of capital operation.

But living in Reality, he trusted his own judgment more.

"I must get it." Mark immediately decided; in his view, this might be his biggest gain by Catherine's side.

……(Unfinished, if you want to know what happens next, please log in www. qidian. com, more chapters, support author, support genuine reading!)