What are left-side trading and right-side trading?
Finally someone has thoroughly explained the "fool-proof" trading method that few people understand!
Left-side trading is actually a reverse trading, which is the so-called "others are fearful, I am greedy, others are greedy, I am fearful", while right-side trading is a trend-following trading, which means chasing in the early stage of the market rise and leaving the market in the early stage of the market fall.
01. Left-side trading, commonly known as value investment.
It means starting to buy when the price of a stock/coin falls to an undervalued area with a very high safety margin, and the more it falls, the more you buy.
Then, wait for the time cycle and capital cycle for the stock price to rise in value, reflect the true value, and make a profit.
Right-side trading, commonly known as trend investment. After a stock/coin shows an obvious upward trend, intervene and follow the funds to take the elevator, from undervalued stock prices, speculation to overvalued stock prices. Right-side trading does not require waiting time, you only need to grasp the trend and follow the trend to obtain the benefits brought by the capital premium.
As a small retail investor, right-side trading will obviously be more efficient in the use of funds, and the overall comprehensive return will be better.
The "pit" of left-side trading
Why are some investment giants, such as Buffett, better at left-side trading, while small retail investors are not suitable for left-side trading? Left-side trading is a poison for small retail investors.
There are two main reasons.
1. The value range cannot be controlled.
It is a false proposition for retail investors to do value investment. So many main institutions, so many fund companies, and securities institutions go to listed companies to conduct research and market research, and sometimes the research reports they make are a mess. As an ordinary retail investor, how can you judge the value and how can you control the value range? Many times, you think that the performance of a stock is good. After buying it, not only the stock price has fallen all the way, but the performance has also changed directly and fallen all the way.
Retail investors can be said to know nothing about a listed company, and can only make predictions about the future prospects through some public information. But for a reasonable value range, there is actually no concept at all. Therefore, retail investors can do value investment, but the search for the value range is actually a bit blind, or it can only be judged by experience. In this regard, compared with large main institutions, they have more comprehensive information and are more advantageous.
2. No patience for time cycles.
Large funds are often more accurate in grasping time cycles than retail investors. How many retail investors have obtained big bull stocks, but sold their stocks/currencies at the beginning of the rise, just when they were untied. Large funds conduct left-side transactions, which is an active trap, while retail investors conduct left-side transactions, most of which are passive traps and passive holdings.
Therefore, when there are some changes in stock prices, especially when they are untied, retail investors will be eager to sell. The trading mentality of retail investors is that they gradually get lost on the way down, gradually begin to doubt, and become hesitant and confused on the way up. The time cycle of left-side transactions is very long, which makes retail investors suffer physically and mentally, and they can't hold stocks/currencies. Large funds are planned, planned, and intervene with confidence, while retail investors' patience is based on being trapped. Once they are untied, they will naturally miss it.
Another point is that time is valuable. Large funds need to make arrangements, while retail investors can choose stocks that are currently rising. Retail investors do not need to wait for a cycle with large funds. Trend trading can often maximize the value of funds.
Another important reason why large funds favor left-side trading is the issue of capital volume. Due to the large amount of funds, if you choose right-side trading, there may not be so many chips in the market. However, left-side trading is on the way of panic decline, and there are relatively more chips. You can buy all the way down, "bottom-fishing" step by step until the market balances and the bottom is built.
Of course, retail investors are not unable to do left-side trading. For those companies that have in-depth research on certain listed companies and are sure that they will show their talents in the future, it is completely possible to make arrangements during the decline. The premise is that there must be clear performance expectations, rather than guessing future trends based on historical performance.
02. Advantages of right-side trading
After saying that left-side trading is not suitable for most retail investors, let's talk about what advantages right-side trading has.
First of all, we must understand that the rise in stock prices itself is not due to performance or themes, but simply due to the favor of funds for this stock. This is why some people always mention that stocks with good performance do not rise, because they do not like this stock with good performance, that's all.
Similarly, a stock/currency always has a theme, why did it not rise before, but it rose now? On the surface, the theme has exploded, but in fact, funds began to speculate on the theme, that's all.
Therefore, the source of all rises is the intervention of funds. And the intervention of funds naturally forms the trend of stock prices, which is right-side trading, commonly known as trend trading. There is a cycle for the entry and exit of funds, so there is also a cycle from the formation to the end of the trend. Right-side trading is to intervene from the beginning of the cycle and wait for the end of the cycle to leave.
The biggest advantage of right-side trading is to follow the trend of funds, avoid the pit of time, and improve the efficiency of fund use. It can be understood that gold will always shine, it's just a matter of time. Right-side trading itself is to follow the funds to pan for gold, and then take action after seeing the gold, which greatly reduces the time cost required for panning for gold.
In addition, right-side trading has several other advantages.
1. Avoid floating losses and stop loss risks.
Left-side trading is to start buying and building positions during the decline. To put it bluntly, left-side trading often indicates floating losses. However, in many cases, floating losses may become real losses. When you have no funds on hand and are in urgent need of funds, you must sell stocks to cash out. At this time, if the stock is still in a downward channel or there is no profit, you will face the embarrassing situation of stopping losses in advance. To be precise, it is easy to incur actual losses due to stop losses. Left-side trading requires a long wait, while right-side trading can perfectly avoid it and reduce unnecessary losses.
2. Avoid stock selection errors.
The second point is to avoid problems in stock selection. Retail investors' judgment on the quality of stocks/currenciesIn fact, it is very weak, but this aspect is the strength of funds. The stock price/coin price has risen, and funds have intervened in large numbers, indicating that funds have conducted in-depth research and judgment on this stock. No large amount of funds will be stupid enough to blindly take over the order. They are all careful calculations and careful consideration before choosing to buy. Therefore, following the funds to select stocks is far more likely to make money than selecting stocks based on fundamentals. After all, funds are the driving force behind the rise of stocks, not those empty performances.
3. Hold patiently and pursue profit maximization.
The last is profit maximization. If you buy a stock/coin, it will rise all the way, without psychological burden and pressure, it is easier to hold the stock/coin for a long time. Some people will say that they are afraid of high stock prices, and they may start selling without much increase. In fact, this is normal, because the price exceeds cognition, and they will panic and want to sell. But in essence, the selling in this situation is longer than the selling after the left-side transaction is trapped and the untrading occurs, and the income will be higher.
Several iron rules for right-side trading
In fact, most of the veterans who are galloping in the stock market advocate right-side trading. But it is not so easy to really do right-side trading well. Excellent right-side traders are not like everyone imagines, turning over the gain list every day to find stocks with trend breakthroughs. Instead, they take the lead in putting those stocks with outstanding themes and good fundamentals into the self-selected pool and wait for the signal of the right-side buying point to appear. There are actually many iron rules for right-side trading, and it is not a breakthrough and pursuit of gains as a matter of course.
First, trend breakthrough confirmation.
The first principle, I don’t think I need to say much, is trend breakthrough. But many people still don’t understand, which means it is called trend breakthrough. There are three confirmation signals for trend breakthrough. One is that the stock price hits a short-term high, the second is that the stock price breaks through the long-term trend pressure, and the third is that the moving average turns back upward. It can be said that all three are indispensable, and this is the obvious confirmation signal of trend breakthrough. The first principle of right-side trading is to wait for the signal to be clear before intervening, without any advance lurking.
Second, the trading volume is enlarged.
The establishment of any upward trend is accompanied by an increase in volume, and the end of the trend is accompanied by a decrease in volume. This is an inevitable law, because the capital cycle is like this, from entry to exit. The increase in trading volume is an inevitable condition for the start of a trend, so it is also a principle that trend trading must abide by.
Third, wait patiently for false breakthroughs.
Another key point is that false breakthroughs appear in the trend. This situation is very common. It seems to be about to break through, but it encounters a continuous decline after buying. At this time, you must not cover your position. If the selected stocks are optimistic about the long-term, you can choose to lie flat and wait patiently for the confirmation of the next trend buying point. If the selected stocks are optimistic about the short-term, there may be a risk of stop loss.
Fourth, wait for a retracement to add positions.
The last one is to miss the trend and wait for a retracement to add positions. For some stocks, the trend that appears is not a long-term trend, but a short-term trend. It is very likely that after the trend buying point appears, it will continue to rise as soon as you hesitate. In this case, it is recommended not to blindly chase highs, because although the trend channel has been formed, the slope of the channel is not determined. The best way is to patiently wait for the slope of the trend channel to be clear, and when the stock price falls back, add positions clearly.
Right-side trading is not as easy as imagined, otherwise all funds can choose right-side trading to enter the market.
However, right-side trading itself is not complicated. It is a resonance behavior of capital clusters, forming a trend, which brings a short-term premium on stock prices.
Ordinary retail investors, especially those without investment research capabilities, must be wiser to choose right-side trading. Don't be superstitious about the so-called left-side trading theory of some big guys. For big guys, it is indeed correct, but for retail investors, it is not applicable.
If you want to accumulate capital the fastest in the stock/coin market, you must understand the essence of trend trading.
As for the need for left-side trading in a bear market, it is the biggest advantage of small retail investors that the small ship is easy to turn around.
Only by grasping the advantage of capital flexibility can you get the dividends of the main force.