illiquid stocks and growing pains

A

apo99

Hey guys,

I have been trading illiquid stocks listed on the tsx and tsx-v (stocks under 1$ less than 200k volume a day) for about 5-6 years with fairly good success. But as my account grows I have been facing many challenges.

I cannot increase my position size since there is no liquidity so i take smaller positions in many different stocks. I might have 75 open positions at a time which makes it very difficult to manage especially since i am a manual trader trading of lvl 2

By specializing in such a specific small niche in the already small tsx and venture market i have have done quite well but this has also handicapped me and locked me in this way of trading.

does anyone have any insight about this obscure market? or are there any other traders specializing in illiquid stocks?

Apo
 
This is why there are opportunities in low liquidity stocks if you pay close attention - precisely because the absolute $ size of those is relatively small. To scale up, you have to get a bigger edge so you can take more liquidity at worse prices, trade more stocks (but that's hard to do and pay enough attention to do well), or explore other strategies in more liquid stocks. It's a good problem to have anyway :).
 
truetype said:
Yes -- trade a more liquid universe of names.
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Unfortunately I have become a specialist in these stocks and cannot transfer what I have learned to other products. But I am still convinced there is a much larger edge here which is why I would rather my strategy go deep rather than wide.
 
apo99 said:
Hey guys,

I have been trading illiquid stocks listed on the tsx and tsx-v (stocks under 1$ less than 200k volume a day) for about 5-6 years with fairly good success. But as my account grows I have been facing many challenges.

I cannot increase my position size since there is no liquidity so i take smaller positions in many different stocks. I might have 75 open positions at a time which makes it very difficult to manage especially since i am a manual trader trading of lvl 2

By specializing in such a specific small niche in the already small tsx and venture market i have have done quite well but this has also handicapped me and locked me in this way of trading.

does anyone have any insight about this obscure market? or are there any other traders specializing in illiquid stocks?

Apo
More...



Hi Apo99,

1. You mentioned in another thread that you believed that your strategy could scale to 4-5 mill. Are you now focusing on less liquid stocks so that this is no longer possible?

2. Since your post in 2016 have you surpassed 200k? Where are you at now in terms of account size?

3. Without divulging your strategy if you give one of two examples of a typical setup:
Whether you hold overnight and time to scale in and average trade duration are important in evaluating approaches to scale your strategy up, and not only side-way.

4. I am also assuming that none of the issues you are trading are optionable, correct?

5. Have you considered the US markets (I have a feeling that you have but would like to know your history with this):
https://finviz.com/screener.ashx?v=211&f=sh_avgvol_u100,sh_price_u2

Looking forward to discussing.

jtunner
 
jtunner said:
Hi Apo99,

1. You mentioned in another thread that you believed that your strategy could scale to 4-5 mill. Are you now focusing on less liquid stocks so that this is no longer possible?

2. Since your post in 2016 have you surpassed 200k? Where are you at now in terms of account size?

3. Without divulging your strategy if you give one of two examples of a typical setup:
Whether you hold overnight and time to scale in and average trade duration are important in evaluating approaches to scale your strategy up, and not only side-way.

4. I am also assuming that none of the issues you are trading are optionable, correct?

5. Have you considered the US markets (I have a feeling that you have but would like to know your history with this):
https://finviz.com/screener.ashx?v=211&f=sh_avgvol_u100,sh_price_u2

Looking forward to discussing.

jtunner
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Hi Jtunner,

1. I am focusing on the same stocks as i was before and trying to break into higher priced stocks. Looking back i think 2m would be pushing it, but I am exploring other options. When I first started i thought 100k would be the max. The issue is that in the tsx and tsx venture a lot of the volume goes through dark pools so its hard to judge real volume.

2.My Account is at 800k $CAD now, the additional money is from saving, compounding my gains and a good friend of mine gave me some money to trade with.

3. I trade "bubbles" in these stocks. So I place my orders when i see them thin out or sell off on low volume. I do hold overnight and sometime over 4-5 days.

4. since 99% are under 1$ there are no options available

5. I am currently trying to apply my strategy to US markets but there is some significant differences. I will most likely apply this strategy to higher prices CAD equities.
 
apo99 said:
Hi Jtunner,


3. I trade "bubbles" in these stocks. So I place my orders when i see them thin out or sell off on low volume. I do hold overnight and sometime over 4-5 days.
More...

If I understand correctly, you accumulate a position over a period of time as the stock starts selling off so you can maximize liquidity for your long positions? (i.e. you start scaling in as everyone else starts bailing on long position)

JT
 
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