Disliked{quote} 1. What account leverage are you using. % returns are meaningless without leverage. 2. Everybody here has their own terminology. What do you mean with "trading thin liquidity"?Ignored
We just need to ensure draw down keeps to low levels. Personally I trade with leverage 30:1, it’s more than enough to trade large enough to obtain nice profits.
If you trade EURUSD liquidity imbalances as I do, you will notice the market is not deep and doesn’t contain very much liquidity for much of the day.
It’s shocking thin at the boundaries.
A single 9 pip spike will hit zero bids or asks at the end of its drive on most occasions.
On a bullish drive, buyers out number sellers 3 to 1 and we see this in the Sellers imbalance on the order book. Their orders are absorbed by larger aggressive buying orders so price continues to rise until imbalance is so strong. - all sellers are removed from the chart within reach of spread.
We have now zero sellers at the present spot so price collapses. Here is our chance to jump into the order book and become a seller, small in size and we go in unnoticed.
Thin liquidity is therefore when either the order books is barren of buyers or sellers at current price. We can entry and sell in that example but the big players can’t because they are too large to take advantage of this situation.
Price retraces which of course encourages more sellers to enter onto the market and therefore removing the imbalance.
Only small traders can trade order book imbalance, we have a edge and the big players can’t touch us.
In effect, I trade micro exhaustion of bids or asks on each new leg, only against current trend, never with the trend on M1.
Cheers Rick
Trading thin liquidity at the boundary of the charts
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