EM FX sizing during taper talk — lessons on liquidity

Back in 2013-2014, during the initial taper talk out of the Fed, I remember getting caught trying to pick a bottom in a few EM currencies, specifically the ZAR and TRY. My mistake wasn't necessarily the directionality eventually, but the sizing and underestimation of how quickly liquidity could dry up in those pairs once the narrative shifted hard. I was accustomed to being able to scale in and out of majors with relative ease, even in volatile conditions. With EM, particularly during a significant shift in global risk sentiment, the bid-ask spreads widened dramatically, and my execution slippage on even moderately sized positions became painful. What looked like a decent entry on paper quickly evaporated into significant drawdowns because I couldn't get the fills I needed to manage the trade effectively or cut losses cleanly. The lesson was clear: don't treat EM FX liquidity like G10, and size accordingly, especially when the big global macro currents are shifting. It's not just about volatility, it's about the depth of the market itself. A smaller initial probe, waiting for a clearer price action signal on the rebound, would have saved a lot of capital and frustration.