pair trade small / micro cap

Quote from FrankSlaughtery:

micro caps are one of the least efficient markets out there and offer a great opportunity for an activist investor. here's some research i've done.

http://microcapbargainhunter.blogspot.com/
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I will second that I use to trade the illiquid nasdaq stocks for years until around 2010-2011 when hft and internalization became the norm for these stocks. you literally can not get a fill on the bid or the offer in these stocks unless it was ready to go against you. and if you were long and tried to sell on the offer and you got taken it means that stock is going a hell of a lot higher. you absolutely can not compete for prints in this day and age. I would love to make spreads in these stocks all day long even 100 shares.

I turned to pinks and bullies and those markets are like the wild west. there are no hft in these stocks as far as i can see but i am not looking to make a spread I follow the mailers and scan for beginning volume after these reverse mergers and follow the volume. now that I have found a way to short these things I get short and watch them plummet. I have always followed manipulated traders and followed their lead, I do the same thing now as well thats the edge. I have no desire to guess on where the s&p is going to be, technical breakouts, wondering whos got money on one side for their agenda. take the educated guess work out and trade these because the agenda is very clear cut.

KISS is still a very good approach
 
Quote from bears21:

I will second that I use to trade the illiquid nasdaq stocks for years until around 2010-2011 when hft and internalization became the norm for these stocks. you literally can not get a fill on the bid or the offer in these stocks unless it was ready to go against you. and if you were long and tried to sell on the offer and you got taken it means that stock is going a hell of a lot higher. you absolutely can not compete for prints in this day and age. I would love to make spreads in these stocks all day long even 100 shares.

i agree the market has changed due to the factors you mentioned however the same tech advances also make it easier to accumulate a position much cheaper/easier/silently than before. first, commission costs continue to come down and when you're dealing w/ low price stocks it's obv better to use a broker charging a per trade fee like $5 rather than a per share fee if you're trying to pick up a lot of shares at once. second, algos such as iceberg make it easier to pick up shares without tipping your hand and you don't have to spend so much time/effort to grab the shares since the algo does it for you.

I turned to pinks and bullies and those markets are like the wild west. there are no hft in these stocks as far as i can see but i am not looking to make a spread I follow the mailers and scan for beginning volume after these reverse mergers and follow the volume. now that I have found a way to short these things I get short and watch them plummet. I have always followed manipulated traders and followed their lead, I do the same thing now as well thats the edge. I have no desire to guess on where the s&p is going to be, technical breakouts, wondering whos got money on one side for their agenda. take the educated guess work out and trade these because the agenda is very clear cut.

i agree shorting the crappy cos is a great approach. i only stick to undervalued companies w/ tangible assets that are ripe for a breakup/activist investor and that are fully reporting companies/no reverse mergers (although the risk of fraud has significantly decreased IMHO b/c a lot of frauds have been weeded out).

KISS is still a very good approach
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