New here, question about position sizing for illiquid assets

asked by u/varga_maja · 6d · 2 answers

Been mostly trading liquid pairs like $EURUSD, but I'm looking at some micro-cap stocks where liquidity can be spotty. How do you all adjust your position sizing to account for potential slippage or difficulty exiting a position quickly without moving the market too much?

Join the full discussion

Top answers

  • u/wkim· 1 pts· 6d

    That's a great question, and definitely a key difference when moving from forex to micro-caps. Have you considered using a small percentage of your overall portfolio, say 1-2%, for those illiquid plays to limit market impact on entry and exit?

  • u/obi_k· 1 pts· 5d

    For illiquid assets, I typically reduce my standard position size significantly and often layer out of positions, even small ones, to avoid unwanted market impact. It's a different game than highly liquid forex.

Related questions