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An Update from Robinhood’s Founders

blog.robinhood.com

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Re: An Update from Robinhood’s Founders

#171

Post by yaur »

zippergz wrote: post #110
yaur wrote: post #103

"That in turn led to a “thundering herd” effect—triggering a failure of our DNS system." I'm just a spectator but I can not imagine that this was somehow caused by a DNS failure.

I’m not sure I can even count the number of outages I’ve been involved in that had DNS issues as at least part of the cause.

sure, I've seen outages that are caused by DNS config problems. But I don't think I've ever seen one caused by a "thundering herd" overwhelming DNS servers.

Another give away that this is a lie is that support emails were getting a stock postfix error message which means that MX records at least were resolving.

Re: An Update from Robinhood’s Founders

#172

Post by LaserToy »

malux85 wrote: post #163
LaserToy wrote: post #162

Earlier quoted context omitted.

It is not about scale, it is about the fact that people lost real money. If you can’t make it work you should not be in that business, and I don’t really care how hard they work. I’m taking my account off their platform.

Is this your first day of trading or something? People lose money in trading all the time, for hundreds of reasons and some of those reasons are infrastructure downtime. If your risk profile doesn't reflect that, maybe you should take your money out of trading altogether.

I will take it off this platform for sure.

Re: An Update from Robinhood’s Founders

#173

Post by anon102010 »

malux85 wrote: post #163
LaserToy wrote: post #162

Earlier quoted context omitted.

It is not about scale, it is about the fact that people lost real money. If you can’t make it work you should not be in that business, and I don’t really care how hard they work. I’m taking my account off their platform.

Is this your first day of trading or something? People lose money in trading all the time, for hundreds of reasons and some of those reasons are infrastructure downtime. If your risk profile doesn't reflect that, maybe you should take your money out of trading altogether.

I carry reasonable investment balances - I’m not an active trader but in this space I expect availability. I’d never put my money on RH - and this has nothing to do w risk profile

Re: An Update from Robinhood’s Founders

#174

Post by luckylion »

malux85 wrote: post #169
luckylion wrote: post #164

Earlier quoted context omitted.

On the other hand, they've had plenty of time and resources to do just that in a reliable fashion, it's not like it's one guy in his bedroom (I hope!). It's not like they are volunteers doing this open source for the community, they are getting paid (very well, I assume) to run the system. And Management is getting paid (even better, I assume) to make sure the priorities are right and correct decisions are taken. "Wh…

Can you give me a concrete example of a massive distributed system that has zero downtime? Because the largest distributed system I have seen and worked on was at Apple (or maybe DFP at Google) - and even though they had some of the smartest people in the world and literally billions of dollars behind them, there were still an endless list of problems and downtime events. Spoiler alert: It doesn't exist.

The point isn't that "a system cannot fail", the point is "if the system fails, it's no big deal, shit happens, cut them some slack" is a weird way to look at it for corporate systems, especially in sensitive areas.

If you're running a HA system and you only need one nine to express your availability percentage, sure, sure, you have the smartest people etc and you're doing such a great job, and yeah, yeah, show me one system that has 100% uptime etc.

Re: An Update from Robinhood’s Founders

#175

Post by JumpCrisscross »

LatteLazy wrote: post #149
rolltiide wrote: post #130

Earlier quoted context omitted.

> The fact that they can't offer any compensation might be a big problem for them, since they already have zero trading fees Robinhood makes the most money than any known firm on Wall Street by getting paid specifically to leak user's trades to other traders. SEC requires a periodic report on that which shows compensation. Can't believe people are still buying Robinhood's pitch of misdirection.

Is there a source you can cite for that? Why would anyone want retail investor order data? Especially since most of their orders execute immediately, so you can just get the trade data from the venue...

> Why would anyone want retail investor order data?

Former market maker here.

Retail flow is low risk. If I buy $100mm of institutional flow, I could get a bunch of corporate hedging orders. Or I could make a single bet against George Soros. With retail, one tends to find lots of small orders. Even if there are some with high information, i.e. they're smart money and I'm going to lose money trading against them, they're small enough to be manageable.

Retail is also low information. At an old job, we bought a prominent retail broker's options flow. The number of in-the-money unexercised options that would come through that pipe was mind-blowing. (Today, whoever was buying Robinhood's flow likely got the same.)

Re: An Update from Robinhood’s Founders

#176

Post by ivalm »

CamelCaseName wrote: post #64
ska wrote: post #14

Earlier quoted context omitted.

I agree the level of feedback isn't great, but what would people be compensated for? Did they misplace actual orders?

There were some people claiming that RH erroneously exercised their options on r/wallstreetbets. Could be a hoax, but if it isn't, then that seems like grounds for compensation. Of course, no one complains when RH makes a mistake in the client's favor.

Those people don’t know what is pin risk. Basically their long puts got exercised because automatic execution is determine at 4pm and they didn’t object (creating a short position in equity), their short puts didn’t get exercised because the stock rallied by 5pm and their counterparty was diligent and prevented auto execution (thus no long equities position to compensate the short equities position). Robinhood couldn’t rebuy the short equity position because the actual price rose above the put price leading to a net loss.

Re: An Update from Robinhood’s Founders

#177

Post by JumpCrisscross »

yesiamyourdad wrote: post #158
majormajor wrote: post #27

Earlier quoted context omitted.

"Missed out" doesn't seem like the right phrase here. If you already owned the stock, you still held it, no? So people who were going to continue to sell off got lucky that they couldn't make that trade, and people who were going to buy got unlucky? Does anyone seriously expect compensation, or think that it's deserved, or is it group wishful thinking? How would it even work? Would they just take people's word for th…

This is just like the late '90s, up to 9/11 when day trading was the rage. Now it's back in fashion, low-key. I had never heard of /r/wallstreetbets or Robin Hood (well, barely) until a couple weeks ago.

> Now it's back in fashion, low-key

There is an entire generation that has never traded through a crisis.

Re: An Update from Robinhood’s Founders

#178

Post by speedplane »

ivalm wrote: post #176
CamelCaseName wrote: post #64

Earlier quoted context omitted.

There were some people claiming that RH erroneously exercised their options on r/wallstreetbets. Could be a hoax, but if it isn't, then that seems like grounds for compensation. Of course, no one complains when RH makes a mistake in the client's favor.

Those people don’t know what is pin risk. Basically their long puts got exercised because automatic execution is determine at 4pm and they didn’t object (creating a short position in equity), their short puts didn’t get exercised because the stock rallied by 5pm and their counterparty was diligent and prevented auto execution (thus no long equities position to compensate the short equities position). Robinhood couldn…

> Those people don’t know what is pin risk.

Is it just me, or does it feel like the only people using Robinhood are college students gambling with their parent's money?

Given that many extremely smart people who have devoted their lives to the stock market cannot beat average returns, the lack of Robinhood user's knowledge of "pin risk" seems to miss the greater point.

Re: An Update from Robinhood’s Founders

#179

Post by unicornmama »

vinaypai wrote: post #160
czbond wrote: post #106

On the profession side of this, if you're an engineer at RH in the thick of this - many have been there. It seems dire now, but in a few years the fog, panic, and haze of no sleep will become a story you tell your peers at happy hour. Many will cast stones - but they have been there too. If they haven't, well maybe their day will also come. You may feel bad at the moment - but the best way professionally forward is "…

This is all true for a company that is actually pushing any boundaries as opposed to failing pathetically at a well solved problem.

Pushing the boundaries? They wrote an app that gamifies stock and options trading...

Re: An Update from Robinhood’s Founders

#180

Post by speedplane »

JumpCrisscross wrote: post #177
yesiamyourdad wrote: post #158

Earlier quoted context omitted.

This is just like the late '90s, up to 9/11 when day trading was the rage. Now it's back in fashion, low-key. I had never heard of /r/wallstreetbets or Robin Hood (well, barely) until a couple weeks ago.

> Now it's back in fashion, low-key There is an entire generation that has never traded through a crisis.

> There is an entire generation that has never traded through a crisis.

Given that most crises seem to occur roughly every 7-15 years, there will always be such a generation.

A hypothesis: the reason why crises occur roughly 7-15 years is because that is approximately the length of society's collective memory concerning monetary issues.

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