Chapter Seventy-Seven: Surplus Value

  Tang Xiongfei hastily contacted the bank again.

  But this time, institutions including Mellon Bank took a wait-and-see attitude and did not dare to respond easily.

  Capital leverage is a double-edged sword, which increases its risk while improving capital efficiency.

  In normal futures operations, 10 times and 20 times leverage are more common, while 50 times leverage is an extremely risky operation, meaning that a market decline of 2% (contrarian operation) will result in total loss.

  100 times and 200 times leverage, only appear in very special circumstances, such as the current high-frequency trading, because of its own low-risk and high-funding characteristics, Jin Yuan International can get a loan from Mellon Bank.

  As for higher leverage, even if it is a brilliant design of lever, it will inevitably pose huge risks to the bank, because it can only withstand market fluctuations of less than 5%. If the stop-loss is too slow, and the bank cannot find someone to take over within a short period of time, then it will lose its own money.

  This is unbearable for financial institutions.

  Tang Xiong flew and ran for half a day, but didn't get any positive response, so he had to dejectedly return to Chen Yi.

  The latter shook his head and said "I know", continuing to exert himself, raising both arms, doing knight's step battle training.

  One day without practice is like rowing a boat upstream. By now, he has also become somewhat familiar and accustomed to the physical training.

  It is said that at the level of Dou Qi, pure physical training will no longer play an important role. But most Sheng Qiao people are unable to cross that threshold, and Chen Yi himself never thinks about these things.

  Chen Rongxi sat in front of the computer, only to find it strange that his second brother's exercise method was peculiar, without knowing that this was the crystallization of intelligence and technology tempered by a certain nation for thousands of years.

  Chen Yi glanced at his little sister, took out two bottles of energy recovery potion from the locked cabinet behind him, one for himself and one for his little sister, saying: "Sports drink."

  He casually closed the cabinet door, and the password lock made a "click" sound, automatically resetting.

  "It's really tight." The little sister laughed at him and said, taking a big gulp of the energy recovery potion, "It tastes milder than Red Bull. Give me the bottle?"

  "What's the use of taking this thing back?" Chen Yi said, but didn't stop him.

  The craftsmanship of the Sant'orio people is surprisingly exceptional, but apart from the intricate floral patterns on it, there are no special words, just a beautiful glass bottle.

  Two people on the Chinese side did nothing, Tang Xiongfei was busy contacting various banks, and high-frequency trading was all handed over to skilled traders.

  This young man from Texas was filling out the necessary forms and inputting them into the computer, while excitedly shouting: "This job is too much fun, too much fun!"

  Can't it be fun?

  He was operating the software alone behind, but it was a "Kraken" supercomputer worth hundreds of millions of dollars. Not to mention a small trader, no one on Wall Street has ever used it.

  With this heavy artillery, operating hundreds of millions of dollars in the stock and futures markets is like driving a tank on a pedestrian street, with an unbeatable advantage that's thrilling to the point of trembling. The surrounding crowd, no matter how handsome or beautifully dressed, still has to make way.

  Tang Xiongfei's heart beats almost in sync with the numbers on his account, every time he talks to a new bank manager, he has to re-check the numbers on his account.

  Forget it, he asked in a low voice: "Mr. Chen, earning $30,000 in 1 hour, isn't that a bit too fast?"

  "This is Wall Street, $30,000 is just a blade of grass."

  "Other high-frequency traders don't seem to be making that much profit." Tang Xiongfei said this behind other people's backs, he was alone in the US and indeed had higher expectations for safety.

  Chen Yi thought for a moment, understanding his concerns, and said in a softer tone: "Other traders are still making money from exchange rebates, their capital utilization rate is high, and they often go hungry with big eats, so proportionally speaking, we naturally make more."

  He actually hid another point, that is, his computer was more advanced and reacted faster, so he could precede other traders and eat the fatter ones.

  Tang Xiongfei suddenly enlightened expression.

  Chen Yi continued: "Today's trading time is already half over, you can contact the bank again tomorrow, no need to ask for a leverage of 3-4 times immediately, just a little increase will do. Even if we increase the leverage by 10 times, it would still be a yield rate of more than 10% of our principal. Also, keep in touch with all major exchanges, once our trading volume increases, ask them for higher rebates, especially smaller exchanges, pay special attention."

  If you are a high-frequency trader, when the amount of funds is small, you will often reside in a certain exchange to get higher rebates. Chen Yi relies on flash trading's advance quantity to make money, so he can only take care of it.

  "I understand." Táng Xióng Fēi stood up abruptly, himself unaware that his attitude now was completely different from before when he was in the country.

  A laptop on the desk emits a humming fan noise, which is all the more disturbing in the quiet early morning hours.

  "The Mermaid" is working harder and harder.

  Administrators in Wisconsin, unaware that their precious had fallen into the wrong hands, were diligently adding processors and memory based on the amount of computation displayed on the screen.

  But those numbers also come from Chen Rongxi's settings.

  Unless someone systematically analyzes the mermaid, it's likely that no clues can be found at all.

  Time slips away like a mouse sneaking off quietly.

  The closing bell of the New York Stock Exchange rang, and Chen Yi made himself a cup of tea with the water being the BBQ's energy recovery potion - exclusive formula, unchanged effect.

  He handed Chen Rongxi a bottle of fruit juice mixed with energy recovery potion, saying: "You don't have to rush either, get a good sleep, leave the rest to the accountant, and don't let mom know."

  "Absolutely not." The little sister smiled slyly, like a fox's younger sister.

  Chen Yi patted her head again and asked in English, "Tang Xiongfei, which side calculates the account faster."

  Since the establishment of Jinyuan International, the commercial gene in him seems to have been activated all at once. Or maybe it's the leisurely life of a wealthy family that allows him to calmly face tens of thousands of yuan in tension.

  Tang Xiongfei was different, he excitedly replied in both Chinese and English "Yes, yes", and continued: "Our account has 230,000, we give the bank around 10,000 interest, the rest is almost all pure profit, it's so cool."

  In just one short day, the principal expanded from $100,000 to $200,000. Those ordinary drug traffickers would have to work hard for half a year to get this huge sum of money.

  The financial world is the real whirlpool of the world. All their inventions and creations, all services and work, are for sucking away the wealth created by the world - ironically, while they suck away others' wealth, they indeed greatly accelerate the speed of creating wealth for others, only the former far exceeds the latter.

  Chen Yi had expected this and smiled slightly: "After making out the specific accounts, we can go to rest. Starting tomorrow, we will continue with the 2.3 million principal."

  Everyone burst out laughing, but unlike Chen Yi's smile, many people still had a hint of doubt. This doubling speed, let alone several months, even one or two weeks, was catching up with the hard work of traditional companies for years, giving people an unreal feeling.

  That Texas kid has never seen such a rate of appreciation on Wall Street.

  Chen Yi didn't worry at all.

  Not to mention that this is a profit without calculating the depreciation of fixed assets, even if it's true, it can't be considered as one of the fastest-growing profits on Wall Street. In history, countless financial institutions have grown at an astonishing rate in various new technologies and intelligence games, and then become giants.

  In Wall Street's pool, steadily growing small fish fry are feed.

  On the other hand, if the cost of a supercomputer is really taken into account, a "Tianhe" worth $1 billion with a design life of 4 years will have a daily depreciation of $680,000, plus maintenance costs that are twice as much. Even if the daily gross profit can reach $14.4 million, the net profit is only $800,000.

  However, the reality is that he doesn't have to pay for any of the costs of a supercomputer, while Wall Street brokerages wouldn't use such expensive machines and wouldn't do "flash trading" just with $100,000.

  For them, the amount of funds is not a problem at all. Under the leverage of 200 or even 1000 times, $1 billion can be used as $20 billion or even $100 billion. Organizations that can take out $10 billion in cash are as common as cow hair.

  So high-frequency traders are limited by the trading volume of their computers, the carrying capacity of exchange computers and the size of the entire market, and can only reluctantly restrict the scale of their transactions.

  Like any financial innovation of any era, high-frequency trading has been bearing the countless expectations of financial capitalists since its birth - a stable and risk-free arbitrage tool that sucks up nutrients according to market size and capacity. With the help of this tool, New York's financial companies can finally fairly print money for the earth and never worry about it not being paid back.

  Jinyuan International officially announced that it has joined the ranks of high-interest loan sharks on Earth.

  The next day Wednesday. King Yuan International profit margin was 75%, actual earnings exceeded $170,000.

  Thursday. Jinyuan International's profit margin was 85%, with actual earnings exceeding $340,000.

  Friday. The frenzy before the weekend arrival greatly increased the stock price difference, with King Yuan International's profit margin soaring to over 130%, and actual gains reaching $960,000.

  By then, four days of lightning-fast trading had brought in a profit of $1.6 million, increasing Chen's cash on hand to $1.7 million.

  Not to mention Tang Xiongfei and others' various expressions, even the auditors of Merrill Lynch responsible for small-cap company projects were left staring in amazement.

  Providing funding to Wall Street, a large bank auditor who mainly engages in securities business can be said to have seen it all, but he has never seen a stock company that can complete transactions of over 10 million shares with nearly double the profit every day and 16 times the profit in a week.

  In some individual or combination trades, this situation occasionally occurs, but a single trade for four consecutive days?

  Before Monday, the auditor notified Tang Xiongfei: Jinyuan International's short-term leverage has been increased to 265 times.

  This is the highest limit for companies under $10 million.

  Tang Xiongfei immediately informed Chen Yi.

  Chen classmate, who had already puffed up his stomach, immediately replied: "To be promoted to a quota similar to getco."

  These are currently the most famous high-frequency traders, their leverage is between 500 to 1000 times.

  Tang Xiongfei was stunned, after hanging up the phone he calculated with his fingers, what is 500 times of $1.7 million?

  ……

  May 1st, third watch