Chapter 49 High-Frequency Trading

  Young people's minds are scattered, and having doubts is a good thing. But what can supercomputers do on Wall Street? Chen Congyu was speechless for a moment.

  Chen Congyu is a self-taught businessman, with clear thinking and rich experience being the main reasons for his success. However, after entering the new millennium, the increasingly large company posed great challenges to his management skills. On the other hand, the once vast fund management also restricted the further development of the Chen Group. It was precisely because he felt his own inadequacy that Chen Congyu hoped his son could make some changes.

  He just talked about so many benefits of financial professionals, but couldn't explain the problem about finance, and then turned to his wife Fang Manyi for help.

  Fang Manwei pinched him without changing her expression and said to her son, "Wall Street needs a supercomputer, so there must be a lot of calculations to be done. If you want to know about this kind of thing, you can ask various professionals. The professors at school are there to teach and answer questions, they can give you a foundation, and then it will be easy to learn anything else later. Jiangning University has very good teachers, don't miss the opportunity."

  Chen Yi pretended to understand and yet not understand at the same time, without responding to the second half of the sentence. Instead, he continued to say: "Then who can I ask? Who should I ask?"

  Fang Man was taken aback for a moment, then poked her husband and said, "What high-level talent does your company have? Have them give our son a lecture."

  The Chen Group's operation is still relatively stable. After thinking for half a day, Chen Congyu finally said straightforwardly: "I'll call Old Zhou from the personnel department and have him bring someone over to talk about it?"

  "Find two more recent graduates." Fang Manyi clapped her hands and said, "Let's let the experienced people tell our son about it."

  The couple of two encountered about son's matter, again calm not to come down.

  If it were normal, Chen Yi would definitely think that his parents' behavior was boring, but given the importance of supercomputer applications, he was quite looking forward to it. After all, relying on his own imagination, he couldn't even get it to work no matter how hard he tried.

  The efficiency of private enterprises is very fast, Chen Yi asked in the morning and met with people in the afternoon.

  They were a certain Ph.D. from the United States, plus two newly graduated students. All three of them had an elite demeanor, except that the former's suit was more fitted, and they all exuded confidence.

  But in comparison, Chen Yi was younger, yet his demeanor was even more impressive. Apart from the upbringing of a noble family's son since young, entering and exiting the Sacred Aiolia Kingdom tens of times also helped to cultivate his temperament.

  Think of Timothy as a mage who is above millions of people, often directing such people, and will naturally be affected.

  Chen Yi stood in the living room of his home, just like when he met Saint Qiao's crowd in the subway. The three people who were originally holding their heads high looked down one by one.

  Director Zhou, who had dealt with countless people, was shocked and opened his mouth wide at this scene. He not only knew that the American Ph.D. was notorious for his arrogance but also understood the significance of such a subconscious action.

  "Good luck, Old Chen." Minister Zhou, who had been friends with Chen Congyu for many years, patted him on the shoulder and laughed: "Your son is quite capable, not like that useless kid of mine."

  "Where, where..." Chen Congyu thought he was talking about the college entrance exam, and quickly turned to flattery, letting flattering words flow like cash, which is always a successful way for business people.

  Fang Manyi poured tea for several people, then stated her purpose, saying: "This isn't just after the college entrance exam ended. My younger brother Xiaoyi is preparing to apply to schools and majors, but there are some questions we can't answer, so I wanted to ask for your advice."

  The three of them laughed in unison. Chen and Old Zhou exchanged a humorous glance. If it were someone with many years of social experience, the first thing they should do is be humble, this is the Chinese way of being a person.

  However, two graduates who had just left school and a Ph.D. student returning from the United States were arrogant and did not have this most basic reaction.

  One of the tender-skinned students asked first: "Have you estimated your scores? Where do you want to go to school?"

  He still remembers the process of the college entrance examination.

  Chen Yi smiled and said: "Jiangning University is already settled, as for the major, Dad and Mom are inclined towards finance."

  "The finance major at Jiangning University is not easy to get into." He thought for a moment and said, "Unless you're sure you can get 620 points, don't even try, but if you want to be safe, you'd better have at least 640 points."

  Scoring 640 out of 720 is no easy feat. At Jiangning High School, only a dozen or so students scored above 640 in the mock exam. Of course, from a national perspective, there are still countless people who can reach this score every year.

  Fang Man-yi and Chen Cong-yu both remained silent, thinking the same thing - first choose a major, if the score is not enough, then consider whether there are other means to help.

  When they reach their position, so-called interests and other unimportant things become the most important.

  With this idea in mind, Fang Manchu interrupted the other's questioning and interjected: "Chen Yi, tell me about the previous question."

  "Oh, I'm a bit curious." Chen Yisheng said with a smile, "I heard that Wall Street has many supercomputers. What do financial people need supercomputers for?"

  Several people looked at the international student.

  The latter did not expect Chen Yi to ask this, but still smiled with a hint of pride: "When I was studying in New York, I interned on Wall Street for a while. If you ask others, it's probably just clichés from newspapers and magazines, no more than analyzing data to do stocks, or even estimating the weather to do futures, but I'll tell you, none of that is true."

  Facing everyone's curious gaze, the overseas student's vanity was greatly satisfied. He picked up his teacup and took a sip of water, clearing his throat: "Even in the 21st century, to make money from stocks, you still need insider information; to make money from futures, it mainly depends on having a large amount of capital. Supercomputers can indeed calculate the weather, and the weather can indeed determine some futures prices, but these data can be obtained by sponsoring research institutions, no need to buy a supercomputer yourself."

  Everyone naturally fell into the clouds and fog.

  The overseas student lowered his voice a bit and said: "Supercomputers, mainframes, they are on Wall Street, actually doing one thing, high-frequency trading."

  "High-frequency trading?"

  "That's right. High-frequency trading is to use extremely short periods of time, through the rapidity of computer transactions, to gain profits. This brief period of time may only be a few microseconds, which is imperceptible to humans." The student said, and then changed his tone: "Let me give you a simple example. Now in the stock market, someone sells a share for $9.12, while at the same time, someone else buys it for $9.18. Because the time is too short, neither party notices the other. At this point, a faster large-scale computer will first buy the $9.12 stock and then sell it to the person who bought it for $9.18, thus earning 6 cents."

  "Six cents?" Chen Yi frowned.

  "The speed of high-frequency trading is very fast, as long as there is a profit of 1 cent, it will be done, but the transaction volume is extremely large, at least several thousand times per second. After accumulating sand into a tower, it's terrifying. This year's high-frequency traders' profits may exceed $20 billion." The student said a string of data and excitedly said: "Don't underestimate a few cents, this is currently the world's only known way to make money in stock trading that will never lose."

  "Doesn't everyone have to go and do high-frequency trading?"

  The student shrugged and said, "When there are more people doing it, the competition becomes greater. When two computers discover a profitable trade at the same time, it's about who is faster. In any case, the average profit in the future will definitely decrease. The minimum investment for this line of work is tens of millions of dollars in large-scale computers. If you want to make more money, the computer needs to be better and more numerous."

  Chen Congyu nodded and said, "One million US dollars, with an annual return of at least 10%, is worth investing in. A return exceeding 30% would make people willing to change their profession... but what's the current profit?"

  It seems he is also moved.

  A surefire way to make money in stock trading, and it's not a far-fetched story. Who wouldn't want a piece of such a wonderful thing?

  The international student shook his head regretfully and said, "It's said that Getco is a global e-commerce company, which earned 500 million US dollars in pure profit last year, with less than 100 people in the whole company."

  Among the staring crowd, he denied again: "High-frequency trading is a competition of computer speed, and quantity is also important. The current threshold is at least $50-60 million worth of machines, plus the capital used for trading, which requires a large amount of funds. In addition, I've heard that there's another type of lightning-fast trading, with even higher requirements."

  "There should be quite a few hedge funds and private equity funds participating." Minister Zhou also listened with a wry smile, saying: "When the group has hundreds of millions of US dollars in spare cash, we'll enter the market to have some fun too."

  $500 million, almost surpassing the market value of Chen's unlisted group.

  Chen Yi's algorithm is naturally vastly different. He has a supercomputer at his disposal, one of the most advanced in the world, and without considering the high fixed asset investment, the return on capital is naturally much higher than that of institutions.

  "He couldn't help but ask: 'To use a supercomputer for high-frequency trading, don't you need specialized software? How do you buy that?'"

  Since Chen Congyu showed interest, the overseas student replied in detail: "Now there are not a few software companies at home that have done similar software, it should not be complicated. There are more foreign software companies, with prices ranging from hundreds of thousands to tens of millions, mainly depending on the transaction volume. If you really want to buy, the other party will modify it according to your computer model. But starting a transaction from China and crossing the ocean is definitely slower than Wall Street. Those guys can't wait to put their computers together."

  "The sea monster" might be in America. Chen Yi's mouth curled up into a sly smile, as if he had spotted a lame rabbit caught by a wolf.

  ……