Sorry to hear your in a position I've been in 2-3 times over the years.

Initially I simply held and hoped...FAIL!

Next I held and averaged down....again in hope and again....FAIL!

Then after taking onboard comments/suggestions from those far more knowledgeable I "bit the bullet" and sold the lot at whatever price I could get. (I'm presuming that you've done your homework on the stock and see little to no chance of recovery?)

These days my MO is as soon as there's an issue of consequence (eg a significant downgrade/structural issues) I sell and sell quickly.

The thing is if you're going to panic...panic early...sell and get out because I've found in most cases the longer you try and hang in the worse it gets.

You can then use the funds elsewhere by adding to your winners or strengthening your p/f by adding quality.

In essence take the pain and get out...and use your money elsewhere and take the capital loss.

My opinion only.

Best of luck.....

@Saasquatch are you talking about a large holding in a stock that has low trade volumes each day?

Buy slow and sell fast is a saying I've heard around these chambers and one I have used with success.

Thanks for the personal anecdotes it's greatly appreciated

That's correct

@Saasquatch my approach depends on what is going on with the stock, and therefore it is hard to share one approach, only. So I will cover the two main tactics I use.

1. Acting on bad news

If you can act early on bad news, and have decided to exit (for whatever reason), it can make sense to get out quickly, even though your actions might significantly move the share price. So you need to look at the orders and prices in the queue, and assess what impact your transaction will have on the SP.

Most likely, you've not got in before others, in which case you could be caught in a stampede for the exit. Its not unheard of in these cases for the SP to fall 10%, 20%, 30% 40%+.

So unless you've decided to get out at any price, be sure to set a price limit at the lowest level you are willing to receive. I never, ever place "at market" trades for illiquid stocks.

2. Selling when there's no news or significant price action

If I want to reduce or exit an illiquid stock when there is no news in the market and no significant price action, my approach is to be patient and ensure that I don't set the price. Or, if I do set the price, to make sure I understand the magnitude of price change my orders will make. (You can judge this by looking at the prices and volumes of other orders in the "queue").

To do this, I make sure the volumes I am trying to sell are not significantly different from those orders in the queue, paying special attention to the volumes of "buys" close to the indicated market clearing price.

In this case it is important to be patient, and you might have to wait days, weeks or longer to get out.

Common to either approach is to understand that with illiquid stocks, your orders can have a significant impact on the share price depending on both the sizes and prices of other buying and selling orders. So I always make sure I assess the situation before placing any orders, and that I protect myself through price limits. (The assessment can change quickly, as earlier order are executed or as new orders are either added to, withdrawn from, or buyers/sellers change their prices.)

Another thing I will usually do is to study the formation of the queue of orders in the 5-10 minutes prior to the market opening, and not add my orders to the queue until the market has opened. This isn't always helpful, because depending on the queue, sometimes trades will clear in the first seconds of the market opening, and at other times it can take more than 10-15 minutes for the first trades to clear. If there isn't significant price action inidcated at the open, I will sometimes wait until the first trades have cleared before trying to enter the queue. This is because I have observed that active traders are often tweaking prices, and so I don't want to contribute to this dynamic. To be honest, sometimes its obvious, but other times its harder to detect - and I am not an expert at this!

Appreciate this insight????

It just takes time @Saasquatch. And if you need to sell a lot quickly, you'll likely need to accept a much lower price as you chew through available demand... But, that can still be the smart move if things really are dire.

As they say, a stock that is down 90% is one that lost 80%...and then halved.

That's why you need a good deal of conviction before building a large position in a relatively illiquid stock.

The reason why you might be tempted to knowingly walk into these so-called 'lobster traps' is that illiquidity can also be a wonderful advantage.

It means that:

• You have less competition from the "smart money" who usually cant invest below a certain liquidity threshold.
• If the business executes as hoped, it takes a lot less capital to drive up the price significantly -- just as bids are thin on the buy side, offers are likewise thin on the sell side.
• You get better prices. Low liquidity stocks dont usually attract the same kind of premium as their bigger peers. (That's why you could get stocks like Stealth on a forward PE of 7 a little while back.)
• It ensures you do more due diligence. Being aware of a low liquidity issue should make you much more prudent in your decision making
• It usually means much more volatility. And that genuinely is a good thing! As Ian Cassel said recently "The more you know what you own the more volatility goes from being a risk to an opportunity"

So dont let low liquidity put you off. But definitely be mindful of it.

Cheers Strawz, a timely reminder of the benefits ❤️

In my experience you just need some patience. Generally, I don't want to be more than ~30% of the daily volume or I end up chasing my own offer down. You can sometimes get a flavour for how much depth might be sitting on the sidelines by putting a decent stake at the bid price and seeing if it gets cleared reasonably quickly. Lots of smaller companies are illiquid but there's often a bit more liquidity waiting on the sideline and if you show your hand you can sometimes get a nibble if not a bite.

There's definitely a skill to it that is best learnt by doing. Like selling anything you have to learn how to feel the market. That only comes with practice and time.

Lots of good advice and shared experience there. My own approach most closes mirrors that of @mikebrisy who explained it very well. Depending on the situation and how quickly you need to or want to exit, rip the bandaid off quick or take your time and study the buy/sell spreads and the price action before and during the day, and ALWAYS use limit prices, NEVER sell "at market" with low liquidity companies.

Much will depend on (a) your own circumstances, and (b) the situation the company is in, as you see it. For instance, if you believe they are at immenent risk of going substantially lower, and soon, then you'll likely need to take a larger loss by getting out more quickly. If you feel you have enough time, you may instead try to limit your losses by selling more gradually, likely using multiple trades over days, weeks, and in some cases months, so move the price down less than a quick exit would do.

@Saasquatch Easiest to answer in meme form:

@Saasquatch @UlladullaDave This is a really great point (and I should have made it too!)

I'll often try putting an order at a price limit between the current "bid" and "offer", particularly if there is a decent volume and several sellers at the "offer". A "bid" close to the highest "offer" might move some of the volume and get your trade away. If the "bid-offer" spread is large enough, it can be significant.

In addition, as @UlladullaDave says there can also be others who aren't in the queue yet, and are just watching it. (Tends to me me!)

In big caps / liquid stocks, there's little point doing this. But in illiquid stocks, there are times when you can get an incremental few % points up to 5-10% on your price by being careful.

Or you can do what some groups like NOT Regal would do and once you decide you want out, any price above $0.0000 is considered good to find a clearing point for you holding.

True @BkrDzn and with 31% of OPT, which is currently in a trading halt, Regal is very likely to completely smash OPT's share price down to very close to $0 if and when they come out of this trading halt, be it next week or later.

And that's a big "IF", coz OPT may not actually trade again from here - they may instead go directly into VA without giving shareholders any chance to sell their shares.

Below is part of their Opthea-Announces-COAST-Phase-3-Trial-Topline-Results.PDF announcement on Monday:

Impact of COAST Topline Results on Opthea Under the Development Funding Agreement and on Opthea as a Going Concern

Following the negative results in the COAST trial, Opthea has been assessing its rights and obligations under its Development Funding Agreement ("DFA") with, among others, the investors under the DFA (the "DFA Investors"). In light of these updates, it is possible that under the DFA, Opthea could become required to pay amounts to the DFA Investors that would have a material adverse impact on the solvency of the company. As previously disclosed, certain instances and events may result upon the termination of the DFA, and upon such termination, Opthea will be obligated to pay the DFA Investors up to four multiples of the amounts paid to the Company under the DFA. Termination can be triggered by a range of events, including, among other things, inability of Opthea to fund development costs, failure by Opthea to continue to use commercially reasonable efforts to develop sozinibercept, Opthea’s insolvency, or disagreement with the DFA Investors. Each termination trigger has a corresponding potential repayment amount of US$0, US$229.5 million, US$255.0 million, US$467.5 million or US$680.0 million.

Opthea’s Management and Board of Directors have been in active discussions with the DFA Investors, pursuant to and as required under the DFA, to explore possible options for Opthea in respect of its clinical trial program and with a view to identifying whether there is a pathway that represents the best outcome for the company and its shareholders. As such, it is possible that Opthea and the DFA Investors reach a negotiated settlement that is different from the parties' existing rights under the DFA.

It should also be noted that the DFA Investors have security over the assets of Opthea in the form of an "all assets" lien. As a result, Opthea is unable to incur further non-equity funding or dispose of its material assets without the prior consent of the DFA Investors.

A copy of the DFA is included as Exhibit 4.19 to Opthea’s Annual Report on Form 20-F filed with the US Securities and Exchange Commission on August 30, 2024.

At this stage, no decision has yet been taken with respect to either trial, including whether to discontinue activities for the COAST trial or accelerate and unmask the ShORe trial. Discussions continue with the DFA Investors to determine the most appropriate course of action.

As of February 28, 2025, Opthea has an unaudited cash and cash equivalents balance of US$113.8M.

--- end of excerpt ---

Not good.

See also: RF1-Investment-Portfolio-Update.PDF

Disc: Not holding OPT or RF1.

Some really great suggests here!

Rectifier Technologies (RFT) is a recent example of how great ideas can easily go wrong when corrupt management shafts the shareholders of a low liquidity stock! Does this bring back some bad memories for a few?

In hindsight you can pick your own exit point. How did investors feel and react at the time? Here’s the Strawman thread https://strawman.com/forums/topic/8655.

I exited quickly, took a hiding and reinvested what was left. A few of my posts at the time remind me of the experience and how I felt!

What are my lessons!

1. Think about what happens if things go wrong with this business? What will this do to my investment and portfolio? How will it affect my liquidity? How will I react psychologically? Lesson - Keep the holding small!
2. Know why you own the Business…VERY WELL! It must be a high quality business with good management with a promising future at a very reasonable price to continue holding it. Hope is not a strategy! Low liquidity can be a huge risk if the outlook turns for the worse. It can also drive the share price to extreme highs if the news is good. It’s risky, and things can, and will go wrong, at some point in the future!
3. Know how the share price behaves before trading it (both buying and selling). Watch the offers/bids and know how yours will affect the share price.
4. I’d prefer to own a more liquid stock if the quality is similar.

I have done very well from some low liquidity business, eg Mader (MAD)…which I no longer hold.