3 ms·
It wouldn't be terrible risk management. The value chosen (after many days) is going to converge to being awfully close to the trading volume × 0.0075
by londons_explore 3y ago
It wouldn't be terrible risk management. The value chosen (after many days) is going to converge to being awfully close to the trading volume × 0.0075
- maxbond 3y agoIf that's the level the fund should be at than that's how they should have written it (as a constant multiple). This implementation makes it possible for the "insurance" fund to be reduced by an unbounded amount on a day of record high trading volume (indeed, the higher the trading volume, the more likely it is you'll withdraw a large sum from the fund). Creating the possibility that some rotten luck could wreck you when you're most vulnerable is bad risk management. It's thumbing your nose in the face of Murphy's Law.