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I would think that it is non-liquid markets that are prone to whipsaws
etc. In a liquid market the bid-ask spread is fairly narrow and one can
get in and most importantly, GET OUT, fairly easily. In a non-liquid
market, the bid-ask is very wide.
Gwenn Ael Gautier wrote:
>
> My 2 cents:
>
> Liquid markets:
> - side: more noise, false starts etc, that is more whipsaw.
> + side: easy execution, almost guaranteed to be filled unless you buy
> "with a gun"...
>
> Illiquid markets:
> - side: You cannot just go in and buy, or you get big slippage. If you
> buy limit, which is your only choice, you risk missing the whole trade.
> That's the risk.
> + side: If you get your execution right, you have an edge as you tread
> in waters nobody dares venturing in.
>
> An edge is what you want.
>
> Yours,
>
> Gwenn
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