My absurd experiences in North America over the years

At seven o'clock in the morning, just as the Manhattan skyline was being tinged with gold, Li Fu was already sitting at his desk.

Three screens were lined up on the table: a Bloomberg terminal on the left, an institutional trading platform for JPMorgan Chase Private Bank in the middle, and an encrypted video conferencing window on the right.

In the video, Lina is sitting in her Nashville office, her hair tied in a neat ponytail, holding a cup of coffee in her hand.

"The Australian dollar has rebounded from its overnight low," Lina's voice came through the speaker. "There was buying interest during the Asian session just now, and the US dollar index is still falling. I think today is a good time to enter the market."

Li Fu had already entered his account and password on the trading platform's login page. "First, open a long position in Australian dollars, with the initial position not exceeding 5% of the account's equity."

"A 20 million margin, 400 times leverage, and a nominal exposure of 8 billion—this could attract a lot of attention," Lina said with some concern.

Forrest Capital is no longer the "small workshop" it used to be in Nashville, where nobody cared. Now, countless eyes are on them.

The correct approach is to split the order.

"Then let's break it down into twenty tasks, with each task having a three- to five-minute interval, and operate them manually," Li Fu realized this as well.

The current foreign exchange market is in the Asian session, where volatility is relatively low and price fluctuations are not significant over time.

The first batch of long positions in the Australian dollar was executed at 0.7082.

The system automatically matches liquidity, and the results pop up almost simultaneously after the transaction is confirmed.

Li Fu did not pause and continued to enter the next order.

0.7085, 0.7087, 0.7091, 0.7083... Each transaction, nominally open at ten million, was absorbed by the market every three to four minutes, like water seeping into sand.

After the fourth batch of orders was executed, a message popped up on the Bloomberg terminal: "Forrest Capital account observed a large-scale long position in AUD/USD. Please confirm whether you made the transaction."

Li Fu replied via text, "Confirmed, normal position building."

"Received. Wishing you a successful transaction."

The standard procedure for institutional trading desks is system monitoring, confirmation and release, without any unnecessary pleasantries. The trading desk does not interfere with decision-making, but is only responsible for clearing and margin monitoring.

When he reached the sixth transaction, Li Fu paused for a moment. "What's the situation with the Euro?"

"The EUR/USD pair is fluctuating around 1.3120, and trading is light in the Asian session," Lina glanced at her screen, "I suggest waiting and seeing the direction in the European session."

"Let's put that aside for now and continue trading the Australian dollar."

By the eighth transaction, the Australian dollar suddenly jumped nearly 10 points, with the price soaring from 0.7095 to 0.7106.

Li Fu did not chase the price. He waited for three minutes until the price returned to 0.7098 before continuing.

"There are buyers entering the market," Lina observed, monitoring market fluctuations in real time. "It's likely carry trade funds from Japan."

As a high-interest currency, the Australian dollar is almost always the preferred currency for carry trades in the financial markets.

"Ignore them, just do things your own way."

Li Fu was much more cautious this time than last time. Being in the spotlight is a good thing, but it could also make him a target of public criticism if he wasn't careful.

At 10:00 AM, 60% of the Australian dollar positions were established, with a nominal exposure of approximately 48 billion, a margin of 12 million, and an account equity of approximately 230 million. The margin adequacy ratio remained good.

He closed his laptop, let out a sigh of relief, leaned back in his chair, and looked out the window.

Just then, my phone rang, and the caller ID showed Jackson.

"Li, have you started building your position?"

"Only a portion has been built, mainly the foreign exchange market."

"Your account saw nearly 50 billion in notional funds traded in Australian dollars this morning, which is visible in JPMorgan's system. That's a big move!"

Jackson chuckled. He was very concerned about the fund's operations, as this could determine whether he could successfully take over the private banking division.

"That's probably just my trading habit," Li Fu replied casually. "When I see a good opportunity, I'll bet heavily."

In reality, he didn't use any candlestick chart analysis or fundamental analysis. He just knew that the 4 trillion yuan investment in China was driving up the economy and pushing up iron ore prices, and that the Australian dollar was about to surge, and that it was basically a one-sided trend.

"That's a good habit; that's how you make big money," Jackson complimented, then changed the subject, "There's something I wanted to tell you. The Senate Banking Committee is currently discussing regulatory proposals for highly leveraged funds, with thresholds of 50x and 100x leverage. It's still in the planning stages and hasn't been formally submitted yet."

Li Fu raised an eyebrow. "Is this aimed at me?"

"It's possible. Right now, you're the only one in the market with big money who dares to openly use 400x leverage," Jackson shrugged. No institutional investor would dare to use 400x leverage.

"Shit!" Li Fu cursed angrily.

He suspected that it was either the Kushner family or Goldman Sachs involved, as they had extensive connections, especially Goldman Sachs, where many high-ranking Treasury officials came from the Goldman Sachs network.

"However, you don't need to worry too much," Jackson's voice came through. "It takes at least three to four months from the initial planning to the completion of the process for a proposal. You have time to prepare. I'll keep an eye on things for you and let you know as soon as there's any progress."

"OK, thank you!"

Li Fu hung up the phone, leaned back in his chair and thought for a moment. The thresholds of 50 times and 100 times precisely bound him, but that wasn't what he needed to solve today.

Jackson was right, there's still enough time.

Moreover, whether the bill can even pass is questionable. The 400x leverage offered by forex trading platforms is a selling point, but institutions dare not use it because large funds cannot afford the losses if they bet against the right direction. As the saying goes, it's not easy for an aircraft carrier to turn around.

However, many retail investors are hoping to leverage large sums of money with a 400x leverage ratio to increase their returns.

Without leverage of 400 times or higher, forex margin trading would be quite impractical, and platforms would lose a large number of customers.

Someone will definitely jump out and object.

In the afternoon, Lina sent an email with the preliminary results of her research on clean energy targets, listing six companies: First Solar, Vestas, BYD, and NARI Group.

The report included financial data, industry position, and summaries of institutional research reports, showing that a lot of effort had been put into it.

Li Fu flipped through the documents; they were relatively unfamiliar to him. He could only confirm that BYD was worth investing in. "The direction is good. There are a few targets I'm not very familiar with. I'll do a more detailed competitive landscape analysis next week, along with a policy risk assessment."

The fund's portfolio construction continues.

His primary target remains foreign exchange, as it is what he is most familiar with and has the greatest potential for short-term profits. He plans to start building positions in euros tomorrow and complete the initial positions in all three currency pairs within a week.

Lina only needs to keep an eye on macroeconomic data and margin ratios.

The challenge lies in the fact that forex trading is a 24-hour operation, and the entire team inevitably has to work overtime or switch shifts during the reduction of positions.

He and Lina had to ensure that one of them was conscious.

Over the next few days, the position building proceeded as planned.

On April 7, the euro/dollar pair was entered in batches between 1.3140 and 1.3180.

Li Fu used the same method, with each transaction nominally amounting to 50 million to 100 million (400 times leverage), completed in 15 transactions with intervals of two to three minutes.

Liquidity was good after the European session opened, making it easy to place orders.

On April 8th, the second round of position increases for the Australian dollar began. With the Australian dollar consolidating around 0.7150, Li Fu took advantage of this consolidation range to buy another 4%.

There were no significant market fluctuations; everything remained stable.

On April 9, positions were established for USD/JPY.

Li Fu placed short orders between 99.80 and 100.20, with each order having a nominal capital of 30 million and shorter intervals. The Japanese yen has much deeper liquidity than the Australian dollar, so there was almost no slippage when taking orders.

On April 10, the Australian dollar position was fully established, the euro position was 60%, and the Japanese yen position was 40%.

The total notional capital exposure is approximately 140 billion, the total margin is approximately 3.5 million, and the account equity is approximately 3500 million.

The entire position building process took five days, with most of the positions established at relatively favorable price levels. Of course, this was considered quite conservative, as only 10% of the positions were used.

Unless a black swan event occurs, there is virtually no possibility of a margin call.