Playful learning in illiquid markets
Updated
Not all data providers on TradingView support order book data. So, I always go check the local order book when I see the telltale signs of low liquidity like extremely low volume or massive swings in very short timeframes. B20 is a great example. The order book on Poloniex has a huge spread: .62 on the bid and .92 on the ask. This book is so thin that anyone with $1000 could execute a market buy and push the market 269% instantly.
Okay, so what do you do about this? I usually put in micro bids and asks at each end of the spread. Each trade there gains 30+%. It is not big money due to the low volume, but it can be a fun and highly educational game.
What do you learn doing this?
1) If you are new and having a hard time understanding the order book, play in these markets with a couple of bucks. The nature of the order book is a lot easier to see when it moves slowly. And, even a couple of dollars on the line helps accelerate education :)
2) Every market, even the illiquid ones, have a bot or 2 in them. In an illiquid market, you will likely be the alone with the bots, so you get to observe how the bots respond to your (and yours alone) actions. With this advantage, you can experiment with the bots to backward engineer their programming with only a few $. This gives great insight into how bots behave in liquid markets.
Best of luck to everyone, and remember...pain the the fastest teacher, but play is the second fastest!
The above post if for educational purposes. Never stop learning.
Okay, so what do you do about this? I usually put in micro bids and asks at each end of the spread. Each trade there gains 30+%. It is not big money due to the low volume, but it can be a fun and highly educational game.
What do you learn doing this?
1) If you are new and having a hard time understanding the order book, play in these markets with a couple of bucks. The nature of the order book is a lot easier to see when it moves slowly. And, even a couple of dollars on the line helps accelerate education :)
2) Every market, even the illiquid ones, have a bot or 2 in them. In an illiquid market, you will likely be the alone with the bots, so you get to observe how the bots respond to your (and yours alone) actions. With this advantage, you can experiment with the bots to backward engineer their programming with only a few $. This gives great insight into how bots behave in liquid markets.
Best of luck to everyone, and remember...pain the the fastest teacher, but play is the second fastest!
The above post if for educational purposes. Never stop learning.
Note
did someone here push the book?
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