73: A First Look at Futures Exchanges

At a Green Gang gambling den on Xiafei Road.

A Si clutched his stomach while Scabby Head had his arm in a sling.

The two of them tearfully recounted their grievances to Zhang Fayao, who sat in the main seat, adding plenty of embellishments.

"Young Master Yao! You have to stand up for us!" A Si wailed, his face covered in snot and tears.

Scabby Head chimed in from the side: "And that pretty boy, relying on his closeness with Seventh Miss Sheng, completely disregards you."

"pretty boy? What's his background?"

Zhang Fayao sat with his legs crossed, smoking a cigar, his eyes dark and sinister.

"Not sure! But he's definitely a fat sheep!" Scarface A Si quickly spoke up. "He delivered a batch of goods to that woman Sheng Aiyi today.

My goodness, it was all top-quality American goods."

"That's right, all good stuff—engine oil for cars, white sugar, bleaching powder, and those... incredibly fragrant noodles.

I've never seen such good things before; they must be worth a fortune."

Scabby Head gave a vivid description, his mouth watering especially when he mentioned the noodles.

"Engine oil?" Zhang Fayao sat up straight.

That stuff was indeed valuable; car maintenance required it, and a single jug cost several hundred silver dollars.

"Are you sure about the white sugar and bleaching powder?" Zhang Fayao stared intently at Scabby Head.

"Young Master Zhang, it's absolutely true. The goods were right there in the display case; we saw them with our own eyes!" Scarface A Si hurriedly confirmed.

Zhang Fayao narrowed his eyes, a ruthless glint appearing. "Sheng Aiyi... that woman again."

He had been very frustrated lately.

At the last black market auction, several items he had his eye on were snatched away at high prices by Sheng Aiyi and a mysterious person wearing a Clown mask.

Not only did it cause him to lose out on a large profit, but it also made him lose face in public.

His father, Zhao Xiaolin, was very dissatisfied with his performance and had severely reprimanded him for his incompetence.

Furthermore, several of his younger brothers were secretly tripping him up and embarrassing him both openly and covertly.

This 'Clown' was like a thorn stuck deep in his heart, causing him agonizing distress.

However, what frustrated him most was that he still hadn't been able to find out who this 'Clown' actually was.

This sense of powerlessness caused him to direct all his dissatisfaction and resentment toward Sheng Aiyi.

After all, Sheng Aiyi was the one close to the 'Clown'.

Zhang Fayao ran a hand through his hair irritably. "You say that pretty boy is very close to Sheng Aiyi?"

Scarface A Si nodded quickly and replied with certainty, "Of course! That pretty boy is very protective of Seventh Miss Sheng!"

Upon hearing this, Zhang Fayao's suspicion immediately flared up. That day, the relationship between the Clown man and Sheng Aiyi had been exceptionally close.

He asked urgently, "What does this person look like? How is he dressed?"

"Tall and thin, wearing a sharp suit, about 40 years old, with short hair."

Seeing Zhang Fayao's expression, Scabby Head answered quickly, knowing the man before him was the definition of temperamental.

In an instant, the image of the 'Clown' flashed through his mind.

Able to obtain top-tier supplies rarely seen on the market and having a close relationship with Sheng Aiyi.

It matched! Everything matched!

"A Si!" Zhang Fayao suddenly crushed his cigar.

"I'm here, Young Master Yao!" A Si quickly responded.

"Have people watch him 24 hours a day," Zhang Fayao said coldly. "Dig up everything about this man's ancestors for eighteen generations.

Where does he live? Where did he come from? Where did he get those goods?

Especially... whether he was in the Shanghai during the days of the black market auction.

Also, find out exactly what his relationship with Sheng Aiyi is. I want it investigated clearly and thoroughly."

He paused, a ruthless glint flashing in his eyes. "And keep a close eye on Sheng Aiyi's side as well.

I want to know exactly what goods that man brought and how much!"

"Yes! Young Master Yao! Leave it to us brothers!" A Si endured the pain and answered loudly.

Zhang Fayao leaned back in his chair, his fingers tapping the tabletop.

He had a premonition that the 'Clown' who had made him lose so much face was about to surface.

Meanwhile,

Lu Fan and Wang Tianxi stepped into the Shanghai Futures Exchange.

Although it was still early May, several months before the Battle of Shanghai,

the exchange hall was already permeated with an unusual clamor and restlessness.

The stifling air was a mix of cheap cigarettes, sweat, and paper, making Lu Fan instinctively cover his nose.

In the exchange's massive circular trading pit, dozens of traders wearing various colored vests were shouting and waving their arms.

They engaged in fierce combat using rapid hand signals and sharp price quotes.

Buy and sell orders were passed at lightning speed through the dense crowd.

The railings around the perimeter of the trading pit were crowded with people.

Brokers in suits and speculators of all kinds were all intently focused on the floor.

Their gazes frequently swept toward the giant blackboards hanging on the surrounding walls.

On the blackboards, numbers written in chalk jumped and refreshed rapidly.

They mainly displayed real-time prices for several major commodities: cotton, cotton yarn, flour, miscellaneous grains, and oil cakes.

Chalk dust fell in flurries as the board writers worked frantically.

Every change in price tugged at the nerves of countless people.

This scene was so noisy it was chaotic; it wasn't a futures market, it was clearly a wet market.

As a manager of Huifeng Bank, Wang Tianxi still commanded quite a bit of respect here.

Shortly after entering, they were invited to an office on the second floor, where the noise level dropped significantly.

Furthermore, through the glass, the entire trading floor was visible at a glance.

"Please look, Mr. Lu." Wang Tianxi pointed toward the floor. "The core is over there.

Those wearing red vests are mostly cotton and cotton yarn brokers;

the blue vests are flour brokers.

They represent their clients in buying and selling contracts."

Lu Fan carefully observed this fanatical bidding scene but couldn't understand it at all.

So, frowning, he asked, "Manager Wang, how does the specific operation of futures trading work?"

"Boss Lu, look at the cotton price over there." Wang Tianxi guided Lu Fan's gaze toward the blackboard.

Using the cotton listed there as an example, he explained: "The essence is buying and selling contracts for goods at a future time.

For instance, a cotton contract agrees to deliver a certain quantity and quality of cotton in a future month at a price agreed upon now.

If you judge that cotton prices will rise in the future, you can buy now, also called going long;

if you judge they will fall, you sell now, also called going short.

When a deal is made, you don't need to pay the full amount immediately; you only need to pay a small portion as 'margin' to the exchange or broker."

"Margin?" Lu Fan asked.

"Exactly, this is the key leverage of futures." Wang Tianxi nodded and continued with an example: "Suppose the current price of cotton is 100 silver dollars per bale.

You buy one contract for 10 bales of cotton, with a total value of 1,000 silver dollars.

You might only need to pay 10%, which is 100 silver dollars in margin.

If the cotton price rises to 110 silver dollars and you close your position by selling the contract, you've made a 100 silver dollar profit—10 bales times 10 silver dollars.

But if it falls to 90 silver dollars, you lose 100 silver dollars, and your margin evaporates instantly.

If you're unwilling to give up and want to continue holding the contract, you'll need to add more margin.

Additionally, there are many more tricks to it, and with the market's recent extreme volatility, the risks of futures are incredibly high."

Wang Tianxi's explanation gave Lu Fan a direct understanding of the leverage principles and the brutality of futures trading.

He sighed inwardly, "This third task is a long and difficult road. I'd better finish the first two first!"