Chapter 1271: Attendance machine

"Before explaining the principle of "inquisitor", first of all, we need to understand what is called "program trading."
Guo Zhaode explained: "In short, with the advancement of financial engineering technology, especially the development of computer systems, people have discovered that they have the ability to establish and manage more and more financial derivatives, because a large amount of computing work can be handed over. It is executed by a computer system, which greatly reduces the workload of people. As a result, financial derivatives are designed more and more, and the original is more complicated. In this way, there will inevitably be a lot of arbitrage opportunities."
Tan Zhenhua immediately interrupted and said: "Zhao De, your causality is wrong, because people who manipulate capital are becoming more and more greedy. They have designed more and more complex financial derivatives, so they need more and more. The greater the computing power, the development of the computer industry has met their needs to a certain extent. Well, no, they will never meet their needs. They will continue to put forward higher requirements, and always will."
Guo Zhaode reluctantly spread his hand and said, "Okay Eric, you are right, but can you let me finish it first?"
Seeing Tan Zhenhua making a "please" gesture, Guo Zhaode continued: "Under this trend, since the early 1980s, more and more businesses have migrated from manual work to computers. Do data analysis to find possible profit points. Slowly, as the computing power of the computer increases, various mathematical models are designed, from analysis to prediction to trading strategy combination, various mathematical models Both have, and later, even the transaction is fully automated. The client’s computer is directly connected to the exchange’s computer through the network. Not only does it receive real-time data and information from the exchange, it can also apply ready-made information based on this information. Mathematical models and pre-made trading strategies are converted into final trading instructions, which are then transmitted back to the exchange’s computer to become actual trading actions. This is the so-called "program trading". In this process, even No human intervention is required."
"Sounds good science fiction, um, I feel that the talent is the one with the most spare." Tan Zhenhua quipped.
"Indeed, talent is the superfluous one." Guo Zhaode also smiled: "The benefits of program trading are obvious. This type of trading does not enter the market based on the trader's own opinions, predictions or emotions, and almost completely eliminates the possibility of investors because of The emotionally chasing ups and downs generated by the market trend avoids the shortcomings of humanized trading, and also eliminates the subjective arbitrariness in trading, greatly reducing the fear of traders before placing orders, the anxiety and the anxiety in holding positions Regret after closing the position. Anyway, in one sentence, everything has been handed over to the data and to the computer. The computer is completely objective. In its world, everything will only be executed in accordance with the prescribed procedures and countermeasures. ."
"In other words, if in the pre-designed countermeasures, it is stipulated that if the market is in state A, then countermeasure A should be used, if the market is in state B, countermeasure B should be used, and so on, the market status and transaction countermeasures are one by one. Correspondence, right?"
Guo Zhaode nodded and said: "This is the principle, but the mathematical model in reality is much more complicated because of the existence of various financial derivatives and the demand for risk hedging. Generally speaking, a set of operating strategies will correspond to many execution actions. In our industry, this is called a "package". For example, I often use a strategy model for the Hong Kong stock market, which includes 15 Hang Seng Index constituent stocks and stock index futures. When I choose to trade Hong Kong stocks by program , I may call this model. At this time, the computer system will judge which countermeasures to adopt according to the real-time trend of the market, and carry out simultaneous trading operations on these 15 stocks at one time, and will also use their own options according to the countermeasures. Decide whether to hedge the stock index futures market."
"It sounds like a very easy way, Zhaode, but I suspect that your purpose of doing this is actually to be lazy."
Guo Zhaode rolled his eyes and said: "I watch the global stock market alone, and not only the stock market, but also the foreign exchange market, the bond market, the futures market, the primary market, the secondary market, the block trading market, and the index. The market...Do you think I can do it if I don't want to be lazy?"
Tan Zhenhua raised his hand and surrendered: "Okay, I know that you worked hard, and I will give you a raise in return-if you don't live on salary, then I will treat you to dinner."
Guo Zhaode spit out the noise, and continued: "Originally, I also think this is a normal thing. Large financial institutions all over the world are doing this. However, since Peng Xia returned to Xiangjiang from the United States last time. , Told me about the hacking war he witnessed, and you sent Kevin Mitnick to Xiangjiang and asked him to gather a group of people to focus on computer and network security technology. Then I found out that I had already A tool that is accustomed to it has such a big loophole!"
"Oh? What kind of vulnerability? Is it because there is a problem with our computer or network system?"
Guo Zhaode shook his head and said: "Neither, the loopholes you mentioned do exist, but if I attack those, I will be suspected of committing a crime."
"Aha! Then you have to tell me, what exactly is this vulnerability attack plan that you discovered that is not suspected of criminality!"
"What is it?" Guo Zhaode smiled triumphantly at the corner of his mouth: "Of course it's because all program trading is rigid. These mathematical models and trading strategies are actually similar to each other. They are all derived from the experience of us traders. At least half of them are designed as an "arbitrage" structure, which uses high-frequency trading to accumulate profits. This is also a strategy and trading method that best fits the characteristics of "program trading"."
"Uh... please speak human words."
"People say that the logic of these "program transactions" is almost the same, and this is where the problems and loopholes lie."
"Um... please lower the difficulty a little bit."
Guo Zhaode stared at Tan Zhenhua with hatred of iron and steel, and said: "Eric, you need to make up for basic financial operations, otherwise, one day you will suffer a loss. Let me give you an example. Suppose, our program trading regulations , When the market has a certain curve, it is necessary to sell some or all of the stocks in the hands. Then this selling strategy is not derived out of thin air. It must be derived from the experience of old traders like us and has a history. The accumulation of data proves the correct probability of this method, right? And most of the successful traders in the world have similar judgments. Historical data proves that the probability of the correct solution is high, and it has been traded by countless programming databases. Quoted, Eric, do you understand?"
Tan Zhenhua nodded and said, "I understand. Therefore, if we want to cause a frenzy of selling, we only need to artificially draw such a curve of the market or individual stocks, and have countless "program trading" computers dumbly copied. Paste, right?"
"Bingo! So I call our program "Judges". It judges those so-called elites who work on Wall Street and have high salaries, but completely entrust their work to the computer, and run to lazy. The reason why I chose to do it today is because today is the weekend, the last trading day of the week. I guess there are countless such elites who have already focused their attention on the upcoming date with their girlfriend or lover. This time is the lightest time of the week in the stock market. We can use the fewest chips to break the longs!"
"Hey Zhaode, how do I feel that you are not a "judge" but a boring attendance machine?"