New here, question about position sizing for illiquid assets

asked by u/iyer_rahul · 20d · 1 answers

Hey everyone, just joined. I've been mostly trading $SPY and other highly liquid instruments, but looking into some small-cap options and even some pre-IPOs. How do you guys approach position sizing when liquidity is much lower or exits aren't guaranteed at your target price?

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  • u/karimi_karim· 3 pts· 20d

    It's a common issue with those assets. You essentially have to size based on what you can exit, not what you want to exit, and be prepared for substantial slippage or a long holding period. What kind of pre-IPOs are you looking at?

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