Chapter 12
Translator: Dreamscribe
Like all securities firms, Kwangwoon Securities was also extremely sensitive to risk management.
A securities firm evaluates profitability based on long-term goals, never expecting high short-term returns.
To begin with, trying to do so in the stock market was no different from gambling, and being too greedy could result in tremendous losses.
That is why investments were always made with a mathematical approach, targeting only areas where money could be extracted stably with the least risk.
Therefore, when Prop Traders lose their grip and start losing money like now, the Risk Managers, who are watching them closely, immediately shut them down.
"Everyone's going crazy again today, crazy."
A series of bear markets. (TL Note: Bear Market- https://en.wiktionary.org/wiki/bear_market#English)
There were some who made money through short selling, but even that was a game of nerves in the end. (TL Note: Short Selling- https://en.wikipedia.org/wiki/Short_(finance))
A bear market doesn’t just drop straight down; it moves up and down repeatedly while drawing a lower limit.
As a result, there were traders who made wrong judgments and lost money.
After stopping the trades of several Prop Traders, the phone rang not long after.
[Manager Kim. Did you just block my trades?]
“Yeah. Manager Yoo, you’re at minus 4% right now. According to regulations, I obviously have to block it.”
[Come on. I’ve been doing scalping for years. You guys let us veterans go up to 5%!] (TL Note: Scalping is the shortest time frame in trading and it exploits small changes.)
“I’m looking at all the charts too. Just stop there for today. Cool your head a bit.”
[Hey! You son of a.......]
Manager Kim Sang-gon hung up the phone as if he didn’t need to hear any more.
Even after that, calls poured in from traders whose trades had been halted.
[Manager, can’t you give me just a bit more time? Just 1% more, please. I can really recover it!]
[Manager Kim. Please save me. If I don’t earn anything today either, how am I supposed to survive this month!]
It was like watching gamblers who had run out of betting money.
He understood their situation too.
Prop Traders were in a similar position to freelancers.
They signed contracts with the company as individuals and took a portion of the profits.
Sometimes people made annual incomes of 10 billion won, and this was exactly why.
But what if there were no profits? Or if they ended up in the red?
Then a certain portion of the losses would be deducted from the next incentive.
Securities firms are cold.
And they are even more cold-blooded when it comes to risk management.
Even if someone loses 3% right now, they might be able to make a profit if given more time.
But statistically speaking, they usually lose more.
Because their judgment is already impaired, leading to bad trades.
So when the preset loss rate for each Prop Trader was exceeded, their trades were immediately halted.
“I have no choice either. I have to do my job.”
If the Risk Manager failed to monitor properly and more losses were recorded, it would hurt Manager Kim Sang-gon too.
In the form of a tsunami called performance evaluation.
“Hmm?”
While diligently doing his job again today, Manager Kim opened his eyes wide at an alert going off like crazy on one side of the screen.
“What is this?”
There was a crazy bastard pouring 5 billion won into a single stock without any risk management.
And wasn’t he repeatedly buying and selling every few seconds?
“There’s a lunatic here.”
Scalping trades?
That’s fine.
Prop Traders are the kind who do scalping trades every few seconds.
But there’s no crazy bastard who would go all-in with 100% of their capital on a single stock, without diversifying, and do scalping trades.
“But this person.......”
Before that bastard could blow all 5 billion won, Manager Kim Sang-gon tried to stop the trades.
But he hesitated at the name of the crazy trader.
“Jung Jin-ho. That’s the guy from last time, isn’t it?”
The rookie Senior Trader who had invested in just three stocks without risk management and was the only one to achieve a high return.
Back then, he made the profit thanks to luck, but when Kim went to warn him not to do it again, Team Leader Park stopped him.
Team Leader Park had told him, “If you don’t understand why I’m saying this, ask your team’s team leader.”
But he had forgotten to ask his Team Leader as he had gone off to do other work.
“.......”
Just as he was about to press the stop button, Manager Kim felt something off and approached the side where the Team Leader was.
“Um, Team Leader.”
“Hmm? What is it?”
“Someone is currently doing scalping trades using 100% of their capital on a single stock.”
“Yeah? Looks like he’s jumped into a listed stock, but isn’t it fine as long as risk management is handled properly?”
“Yes. But he’s doing it with no risk management at all, putting in and pulling out 5 billion won repeatedly.”
At that, Risk Management Team Leader Sung Il-gu slammed the desk and shouted.
“Isn’t that guy crazy? Why haven’t you stopped it already!?”
“Yes. I was about to, but I heard that person is the new recruit who joined recently. Do you happen to know him, Team Leader?”
“What? A new recruit?”
There are always one or two new recruits joining the securities firm periodically.
But if the one causing this major mess is not just a newbie, but a Senior Trader...
The already distorted face of Team Leader Sung turned cold.
“Is the name of that trader Jung Jin-ho, by any chance?”
“Yes, that’s right. Last time too, he bought three stocks without any risk management, so I went to warn him, but Team Leader Park stopped me, saying there was no need. Told me to ask you directly if I was curious.”
“.......”
Manager Kim cautiously studied the Team Leader’s expression.
He looked troubled.
“Just leave him be.”
“Sorry? Even though he’s messing around with 5 billion won like that?”
“Yeah. That’ll actually be better for both you and me.”
What on earth was he saying?
This was someone who would normally flip out and demand to unplug all the monitors on the spot.
“That trader is a parachute hire from above.”
“Ah. No way.......”
"It's exactly what you're thinking."
Royal family! (TL Note: Chaebols (ultra-rich families or, sometimes like in this case, owners of powerful conglomerates or companies) are called "Royal Family" in South Korea.)
Only then did it make sense why Team Leader Park had said what he did.
"It seems like Team Leader Park doesn't know what to do either and is just leaving him alone, but if we accidentally touch someone that even that team leader won't touch? We'll be the only ones screwed. Do you understand what I mean?"
"But if he loses all that money, won't they hold our Risk Management Team responsible?"
“Let’s hope they don’t. What else can we do? Are you really going to stop the trading? Can you handle the aftermath?"
“No.......”
“Just pretend you didn’t see anything over there. You’ve been working hard, Manager Kim. You don’t want to blow up your career.”
At the Team Leader’s words, Manager Kim quietly returned to his seat.
His heart beating uneasily.
If he had pressed the trade stop without asking the Team Leader first...
“Ugh. Just thinking about it is horrifying.”
His only concern now was how much of that 5 billion won the newbie from the heavens was going to lose today. If he lost all that money and then they turned the blame onto the Risk Management Team for not stopping it in advance, that would be a big problem too.
Even though he tried not to care, out of anxiety, his eyes kept drifting toward Jung Jin-ho’s trading screen.
“Am I seeing this wrong?”
But then, something unbelievable was happening.
“Wh-Why is the return rate like this?”
With that kind of reckless investing, the return rate should obviously be negative.
However, Jung Jin-ho’s capital was doing the exact opposite and increasing.
With every repeated buy and sell.
Jung Jin-ho’s profit rate kept climbing and climbing.
***
“Ah-.”
1 PM.
There were still a few more hours left before the market closed, but I already called GG on it. (TL Note: GG = Good Game)
Meaning I gave up because I just couldn’t go on anymore.
“Ughhh.”
I let out a small groan.
My eyes were so sore I couldn’t even open them, and my head spun like an engine on overload, filled with intense pain and dizziness.
“This has its limits too.”
Today was the first time.
I’d used my ability so continuously that it felt like my fingers would break from clicking the mouse.
I learned today that even this ability can get overloaded.
“Looks like the stock prices are still moving actively.”
Maybe I pushed this thing way too hard, because after burning out completely, it stopped sending any sensations at all.
And even just looking at the screen made my head spin, so I shut my eyes.
‘What was my return rate again?’
I’d been clicking like I was possessed on the buy and sell buttons, so I had no idea how much I’d actually made, or lost.
I had just kept clicking.
‘I’ll check later.’
Right now, I felt like I couldn’t even look at my phone screen, so I leaned back in my chair and rested with my eyes closed.
***
Once a company grows to a certain scale, it enters a stage of stabilization.
It means there’s little chance it would collapse from just any issue.
But securities firms were different.
Even now, it wasn’t uncommon to see overseas securities firms many times the size of Kwangwoon Securities collapse in an instant due to poor risk management.
To mitigate such shocks, our country had implemented various financial regulations.
But that didn’t mean we could be at ease.
There had been numerous instances where Korean securities firms made mistakes in risk management and suffered enormous losses.
Goryeo Securities, Daehan Securities, the KIKO incident, and so on.
Some of those securities firms disappeared into history, and those that still remained only survived because public funds were injected just in time.
However, since trust from investors was crucial in the securities industry, once a firm lost its reputation, it could never recover.
"What's with all these documents?"
He could just have a secretary or staff summarize everything roughly.
But what if they left out some crucial detail and the CEO made a wrong decision based on it?
Such a fatal mistake could never be allowed to happen, so CEO Hwang Dae-woon never skipped a word, no matter how long the document.
“The FOMC meeting is coming up. We’ll have to prepare well for that.” (TL Note: The FOMC (Federal Open Market Committee) meeting is a gathering of the Federal Reserve's monetary policy-making body, where they discuss and decide on the appropriate stance of monetary policy for the United States)
The U.S. monetary policy decision meetings are held eight times a year.
Each decision made there has a huge impact on the global financial market.
“Feels like I’ve been even busier since becoming CEO.”
His shoulders were starting to feel tight, he probably needed to rest soon.
“Oh, right. I wonder how our Jin-ho is doing?”
Yesterday was his first day as a Prop Trader, so he must’ve been overwhelmed.
And the market has been in a constant bear trend.
He must’ve lost money for sure.
“Usually, rookie Seniors get a capital of 1 billion won, so maybe he lost around 5% of that?”
Since there’s a Risk Manager, trading is cut off before losses go beyond that.
So the most Jin-ho would’ve lost in two days would be around 50 million won.
Well, that amount wasn’t particularly painful.
It could be considered a life lesson.
That’s how much he cared about the kid.
So, let’s take a look at how much he actually lost.
"Wh-what is this?"
Curious, CEO Hwang checked Jung Jin-ho’s capital.
But the figure exceeded all expectations.
“Why is it 6 billion won?!”
From 1 billion to 6 times that, 6 billion.
It seemed they increased Jung Jin-ho’s capital, considering he was a parachute hire, and even the Risk Manager didn’t interfere.
"Oh my, this is trouble."
Jin-ho probably had no idea what was going on and just traded as he was told.
In that case, how much had he lost by now?
If he had known this would happen, he should’ve summoned the responsible parties earlier and said something… Huh?
“Wait a second.”
But upon closer inspection of the trading screen, something seemed off.
Initial capital: 1 billion.
Then a return rate of 10%.
With that, the Team Leader raised his capital ratio and added 4 billion more.
And today’s return rate?
“2-20%!?”
CEO Hwang Dae-woon had also been a Prop Trader back in the day.
That was during the era when trades were made over the phone, and even then, as now, there were hardly any scalpers who could make 20% in a single day.
No, Hwang Dae-woon was seeing it for the first time in his life.
Especially in Korea, where the upper limit on stock price increases is currently capped at 15%.
Even in the U.S., where there’s no such price cap, no Prop Trader makes 20% in a day through scalping.
Whether there or here, due to thorough risk management, reckless investments were avoided, and more importantly, a 20% daily profit was practically in the realm of gods.
But Jung Jin-ho.
This crazy guy had traded on just one stock and achieved that absurd figure of 20%.
And he had done so by using his entire capital of 5 billion won.
“This must be a system error.”
Otherwise, how could this number be possible?
“What? There’s really no problem? Are you sure?”
But even after calling the IT team multiple times to confirm, nothing changed.
That rookie Guild Member had just written a historic chapter in the records of Kwangwoon Securities today.
“.......”
He had simply extended goodwill to a Guild Member who brought laughter, lightened the mood, was polite, kind, and said he was going out to look for a job.
Even when he became a Senior Trader, he had planned to show the dignity of a Guild Master by warmly comforting him even if he lost some money.
But then, in just two days as a Senior, he had set a record-breaking single-day return of 20%.
Was it just luck?
No. This wasn’t something that could be explained by luck alone.
You could tell just by looking at the trading volume.
He had achieved this return rate purely by repeatedly buying and selling, stacking up small profits.
And even more surprising, the guy had stopped buying altogether starting at 1 PM, and from that point, the stock completely crashed.
‘He knew.’
He knew when it would rise, and when it would fall.
But how could that even be possible?
Really?
“.......”
CEO Hwang, staring blankly at the screen, suddenly snapped back to his senses.
“This isn’t the time for this.”
He quickly picked up the receiver.
“Secretary Jang. Everyone responsible for our Jin-ho... no, Senior Trader Jung Jin-ho, have them all come up to the CEO’s office immediately.”
*****
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