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I'd consider all of those example cases where it's not necessarily reasonable to control your assets. I will say the Verizon case is a bit fanciful because it s

I'd consider all of those example cases where it's not necessarily reasonable to control your assets. I will say the Verizon case is a bit fanciful because it should be pretty easy to hop on another network quickly for most people to bypass that small hurdle... When we're talking about an enterprise scale electronic trading system that should already have tested these sort of load scenarios, especially in a world where AWS/Azure/etc. exist and elastic computing is the target roll out for applications that probably don't even need scaling, that's not a reasonable case. That's a case where something that should already have been planned for and tested thoroughly slipped by. It's especially damaging when it happens repeatedly over a short time span. There's nothing unpredictable here. Management and IT at Robinhood surely read the news and knew there would be massive load today. Surely, someone designing systems and software in this domain understand that the market could be highly volatile and their system needs to be ready for those cases where it's flooded by customer requests or clearly conveyed to customers that it's not ready for such cases.

totalZero 7y ago
Robinhood operate on razor-thin margins and if you just look at where three-month implied vols were trading in early Jan, we are in a 7-sigma event. To be fair to Robinhood, it is probably hard to anticipate and prepare for such an event when you're not charging commissions. They are not the only brokerage that has had problems in the past seven days. And they lose money when their customers can't place orders. "You should assume you can reasonably control your assets at any given time." Sometimes you can't reasonably control your assets, because you can't control them at all. So you shouldn't assume that you can reasonably control them in those times. I hope it is clear that I am not trying to be argumentative; I actually think it's a complete let-down that Robinhood has left so many people frustrated as their wealth whip-saws around in the market. I'm just saying that tail scenarios don't usually fit into our predictive model of what's "reasonable," even when the solutions seem crystal clear in retrospect.
- alasdair_ 7y ago
  >we are in a 7-sigma event On a more general point, I never understood why market returns are assumed to be gaussian - these "one in a billion" events seem to happen far too often.

totalZero 7y ago

Robinhood operate on razor-thin margins and if you just look at where three-month implied vols were trading in early Jan, we are in a 7-sigma event. To be fair to Robinhood, it is probably hard to anticipate and prepare for such an event when you're not charging commissions. They are not the only brokerage that has had problems in the past seven days. And they lose money when their customers can't place orders. "You should assume you can reasonably control your assets at any given time." Sometimes you can't reasonably control your assets, because you can't control them at all. So you shouldn't assume that you can reasonably control them in those times. I hope it is clear that I am not trying to be argumentative; I actually think it's a complete let-down that Robinhood has left so many people frustrated as their wealth whip-saws around in the market. I'm just saying that tail scenarios don't usually fit into our predictive model of what's "reasonable," even when the solutions seem crystal clear in retrospect.

alasdair_ 7y ago
>we are in a 7-sigma event On a more general point, I never understood why market returns are assumed to be gaussian - these "one in a billion" events seem to happen far too often.