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

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

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

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most cryptocurrencies.

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

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extremely low in some cases.

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My opinion?

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

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which to exploit the advantage that our
analysis offers us.

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

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

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Here are some examples of this.

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

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ends of some of their candlesticks.

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This representation is due to the low
volume being traded.

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and we want to avoid this.

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

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

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happening in the interaction between
their participants.

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

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quickly to avoid liquidity risk.

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Imagine you have entered the market in a
good position.

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

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part or all of the position.

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

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willing to be the counterparty.

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

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trading large positions.

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

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

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

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revaluation of their price.