đ What a thin orderbook means for automated strategies.
An orderbook is the list of buy and sell orders waiting at each price.
Thin means there aren't many.
â ïž The problem for automation: a strategy places orders by rule, not by feel.
In thin conditions, the same order that fills cleanly on a busy Tuesday can fill noticeably worse on a quiet Sunday.
Same logic. Same size. Worse price. Nothing malfunctioned.
â«ïžWhat a good strategy does about it: it checks conditions before entering, and sits out when the book can't support a clean fill.
That's often why you see no trades during a quiet stretch.
Not because there was no setup, but because the cost of entering it was too high.
âïž Skipping a bad fill is a decision, not a missed opportunity.
An orderbook is the list of buy and sell orders waiting at each price.
Thin means there aren't many.
â ïž The problem for automation: a strategy places orders by rule, not by feel.
In thin conditions, the same order that fills cleanly on a busy Tuesday can fill noticeably worse on a quiet Sunday.
Same logic. Same size. Worse price. Nothing malfunctioned.
â«ïžWhat a good strategy does about it: it checks conditions before entering, and sits out when the book can't support a clean fill.
That's often why you see no trades during a quiet stretch.
Not because there was no setup, but because the cost of entering it was too high.
âïž Skipping a bad fill is a decision, not a missed opportunity.
