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VSby u/vsiddiqui·6hQuestion

New here, question about position sizing for illiquid assets

Hey everyone, been lurking for a bit and finally decided to dive in. Mostly trade FX and some large-cap equities, but I've been dabbling in a few micro-cap OTC stocks and some less common altcoins. The liquidity can be brutal, and my usual position sizing rules ($EURUSD $SPY) feel completely inadequate; it's like trying to sip soup with a sieve. How do you guys adjust your risk when the bid/ask spread alone can eat half your target profit, or a 10k order moves the market 5%?

3 comments · 3 points

3 Comments

KIu/kittipongtechavimol·5h

ก็เข้าใจเลยครับ เรื่องสภาพคล่องในตลาดเล็กนี่เป็นปัญหาใหญ่จริงๆ ปกติแล้วคุณใช้เกณฑ์อะไรในการปรับขนาดสถานะเวลาเจอสินทรัพย์สภาพคล่องต่ำบ้างครับ เผื่อมีอะไรแลกเปลี่ยนกันได้

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OLu/olenastoica·3h

That's a great point about illiquid assets. For OTC and altcoins, I've found it's not just about the bid/ask spread, but also the volume at different price points. Do you also consider the depth of market (DOM) when you're sizing positions, or is it primarily a spread-based adjustment for you?

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TRu/tran62·1h

Illiquid assets require a different approach. Standard position sizing often overlooks the execution risk inherent in thinly traded markets, which can be far more impactful than the notional value.

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