Original subtitles

Wyckoff and the Small Cap and Liquidity Markets There has often been a question

mark over whether it is possible and or advisable to use the principles of the

Wyckoff method to trade in small cap markets such as shares, penny stocks, or

most cryptocurrencies.

Remember, there is a low volume in liquidity in these types of markets,

extremely low in some cases.

My opinion?

Following the logic, is that this type of market is not the best environment in

which to exploit the advantage that our analysis offers us.

Simply because due to the small amount of capital involved, one or a few large

capacity traders can appear on the scene and easily manipulate the price action.

Here are some examples of this.

These types of markets usually have a large number of gaps and huge wicks at

ends of some of their candlesticks.

This representation is due to the low volume being traded.

and we want to avoid this.

In the first place, because they normally behave very erratically and are

difficult to analyze, making it hard to read the signs about what exactly is

happening in the interaction between their participants.

And second, we want to be able to get in and out of the market easily and

quickly to avoid liquidity risk.

Imagine you have entered the market in a good position.

You are obtaining a significant profit and you decide that it is time to close

part or all of the position.

Then, when you launch your orders, they are not executed because there is no one

willing to be the counterparty.

This may be an extreme scenario, but it can happen, especially if you start

trading large positions.

Because of these associated risks, it is highly unadvisable to trade in this

type of market following the principles of the Wyckoff method, although it may

seem attractive to trade stocks or cryptocurrencies, which may lead to a

revaluation of their price.