How to get out of illiquid stocks

T

trader99

I was in this illiquid stock KNSA. Bought 3500 shares which is small for me since I've been trading super liquid names where I can easily throw around 10K-30K shares. i forgot how illiquid some stocks can be.

So in a short few minutes I'm up close to $1K. I'm saying OK that's nice. let's try to take some profits. I put in a limit order for just 500 shares IN BETWEEN the super wide bid-ask spread. And all of sudden it drops like 30-40cents. WHAT?! Then I realize it's going to be a hard time getting out.

So I kept putting in more limit orders and it kept going down. Long story short, now I'm down $1K (WTF?!) just trying to get out. Geez.

What should I have done? I mean the best answer is probably NOT to trade illiquid stocks. I know now. But supposed you got in based on a good chart pattern setup and it runs up just as you've thought it would. But you can't take profits because when you try to the spread widen and it marches against you.

Should I have just used a market order and get raped in the fills but at least got something rather than waiting and waiting to get out a a good limit price and being down?

The reason i didn't use a market order on the full 3500 shares was because I saw how little was traded like 100 shares here and there. And I was afraid I would get massively screwed or hit hard when I use a market order to get out. But with hindsight, maybe I should have just used a market order at the top of that move and get whatever prices I could get.

what do you guys think?
 
Last edited:
Patience is very important with these kinds of trades. Set it and forget it. I've had limit orders in for hours and days waiting. If there's no specific downwards pressure on the price it will come to you eventually. That's the trade-off with illiquid stocks and why I try to avoid them.

I definitely don't advise market orders as you will get a bad fill and be leaving money on the table.
 
GaryBtrader said:
Patience is very important with these kinds of trades. Set it and forget it. I've had limit orders in for hours and days waiting. If there's no specific downwards pressure on the price it will come to you eventually. That's the trade-off with illiquid stocks and why I try to avoid them.

I definitely don't advise market orders as you will get a bad fill and be leaving money on the table.
More...
%%
That; + keep records , 'cause you may see some patterns in your trading, to help profits.
And tech / teck ETFs can be super strong in 4th quarter, 1st quarter; bio tech/single stocks are even more wild. If my price is not hit on exit quick= i tend to use market orders.......................................

Even on entry , trader 99%, where you can be much, much more picky; IBD founder said ''dont quibble over a quarter + miss the move''
That is a good downtrend/short; but time maybe is not your friend ,if you' re still short, theyre buying @ $5 area. IF that was me , i'm out already on a short + word to wise= print that chart for my chart book
AND HUGE DIFFERENCE in small priced stocks %%; when it stampedes form $5 to 7.50=50% gain or loss from $5.NO way would i wait days on that small cap stock, even if i do that plenty,on a good Volume uptrend + i do.:cool::cool:,:cool::cool::cool::cool::cool::cool:
 
You must log in or register to reply here.
Back
Top