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Spread & Liquidity Gate

Avoids illiquid traps and wide spreads

Traders frequently cite poor fills, big spreads, and illiquidity as silent killers — especially when using market orders or stop-limit orders. This recipe blocks high-risk execution modes when liquidity is poor.

House RecipePersonal6 min setup

INGREDIENTS

🔔Notifications

PROMPT

Build "Spread & Liquidity Gate". If spread exceeds 0.08% or 2 ticks, or volume is below 500k, warn me and force limit-only mode (no market orders). Suggest skipping the symbol if conditions persist.

Pain point

Wide spreads and thin books increase slippage and invalidate tight-stop strategies.

Triggers

  • Bid-ask spread >= maxSpreadTicks OR maxSpreadPercent
  • Volume (or option OI) below minVolumeThreshold

Conditions

  • Different thresholds per instrument type (stocks vs options vs futures)
  • Optional: stricter during premarket/after-hours

Actions

  • Warn: "Liquidity/spread unacceptable for this style."
  • Disable market-order templates and recommend limit-only entries
  • Suggest skipping the symbol and narrowing watchlist

Parameters (defaults)

  • maxSpreadPercent: 0.08
  • maxSpreadTicks: 2
  • minVolumeThreshold: 500000
  • limitOnlyMode: true

Examples

  • If spread > 0.08%, disable market-buy template and recommend limit with patience.
  • In premarket, require even tighter thresholds or no-trade (if not specialized).
Tags:#trading#liquidity#slippage#execution