New here, question about position sizing for illiquid assets

asked by u/tara_kumar · 9d · 1 answers

Hey everyone, just joined. Been trading equities for a while, mostly large caps, but I'm looking into expanding into some micro-cap names. One thing I'm struggling with is how to properly size positions given the wider spreads and lower daily volume compared to what I'm used to. Do you guys adjust your typical percentage-based risk (e.g., 1% per trade) for these situations, or is there a different approach entirely that seasoned micro-cap traders use to manage risk effectively?

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  • u/takin2359· 1 pts· 9d

    For illiquid assets, you absolutely need to adjust. A percentage of your account size might be too large for the available liquidity, leading to significant slippage. Focus more on the absolute dollar amount you can realistically enter and exit without moving the market.

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