39. Trading Nuance

May 09, 2025

Always trade stocks with linearity, let it be long or short. Let others trade non linear stocks. Always focus on linear stocks.
We are in this game to make easy money not difficult money so focus on linear stocks.

Liquidity

There is so much money in liquid stocks unless there is a reason to trade illiquid it doesn’t make sense to trade them. As slippages are very high in illiquid names.
On breakout day you will have liquidity but on other days when you want to get out or when you place a stop that day you won't have liquidity.

From the above graph, typically almost every breakout pattern will be similar in the first 15 mins. It will break out then keep going sideways for the day then later it will break out or it will break out in the first 15 mins and give up all the gains and then it recovers.
Here is the thing stock going up and down and again up, Are they common in bull market or bear market? Answer is the bear market.
There is nothing in the market after researching in the market telling me that buying late or waiting for confirmation is a good strategy. That might give you comfort but most breakout looks like graph going up then sideways then again up.
Reason this happens is because the signature characteristic of a bear market is that there is high correlation with the market. So all stocks are correlated with the bearish market. That's what makes it a frustrating market.
All the stocks move in tandem with the market. There is always correlation between stocks and the market.