Trading on the left side and trading on the right side is one of the strategic issues that technical analysts must first clarify. You can’t have both fish and bear’s paw, and you can only choose one of them.
Trading on the left side refers to the operation strategy of buying on the left side of the trough of a wave of falling market and selling on the left side of the peak of a wave of rising market within a given operation period; In a predetermined operation cycle, the operation strategy is to buy on the right side of the trough of a wave of falling market and sell on the right side of the peak of a wave of rising market.
Both the buying point and the selling point of the left transaction are earlier than the right transaction. When falling, before the price reaches the bottom, the traders on the left will predict where the bottom may be, and buy in the falling stock price before the trough is formed; Buy when it goes up. When rising, before the price reaches its peak, traders on the left will predict the possible peak position, and sell during the rising stock price before the wave peak is formed; Sell when the stock price falls.
Trading on the left side, also called reverse trading, commonly known as buying a set, means that when the stock market is falling, it is not known when the bottom will appear, but you already feel that the stock price is reasonable, attractive enough and with a margin of safety, then choose Buy it, there are many subjective prediction elements in the left transaction (sell high, buy low). In a decline, the cost of trading on the left is relatively low, and it is closer to the bottom area, with a relatively high safety factor, but it also faces the risk of buying more and more, and failing to buy bottoms in advance. "Buy on lows, sell on highs" is a stock critic's favorite saying, but there are a few that can really do it, because most people's way of thinking is "greed when high, fear when low." However, investors who are really better than the stock market are investors with left-handed trading thinking.
The right-hand trading method refers to buying stocks after the bottom of the period of decline, or selling after the top of the period of rise. This kind of trading behavior that does not need to predict when the bottom and the top will appear, but waits until the bottom and the top appear, and then conducts trading operations is called right-hand trading. The transaction on the right will directly make a profit after the successful purchase, but will miss the opportunity before the transaction. The main risk of trading on the right side is that if it is not clear whether the nature of the low point is a local low point or a long-term bottom, the cost of chasing up the rebound is higher than that of the left side trading. Therefore, if you choose to trade on the right side, you must grasp the nature and extent of the rise. It is opposite to the nature and strength of the decline in the left side trade, but the essence is similar. Trading on the right side is also known as the right hemisphere theory, that is, follow the trend, never operate against the trend, and never predict the future.
Which of the two trading strategies is better? We believe that there are no absolute answers. Which trading strategy to choose should consider various factors such as the type of operation, operation style, amount of funds, investor personality, operation cycle, and risk preference.
The advantage of trading on the left side is that when you grasp the right rhythm, you may get more profits than trading on the right side. In extreme cases, you can buy at the lowest point and sell at the highest point. However, there are also corresponding disadvantages. If you make a wrong judgment, you may buy or sell at the "halfway up the mountain". empty risk. Therefore, the transaction on the left requires a relatively high level of subjective judgment of the operator.
The advantage of trading on the right side is that you can look at the market more "objectively". All operations are based on waiting for the market to send a signal, not on "subjective" guesses. The disadvantage is that you have to bear the torture of seeing profits shrinking on the head; when encountering a volatile market, you may be beaten at both ends; it is difficult to grasp the space between the head and the tail of the market.
Compared with the trading on the right, the trading on the left is more affected by personal judgment and is more suitable for operations in volatile markets; while the trading on the right is more faithful to the market and more suitable for operations in trending markets.
The transaction on the left and the transaction on the right can produce the same buying and selling points in different cycles, and they can only be clearly distinguished if they are observed in the same cycle.
The trades on the left are more aggressive, and the trades on the right are more conservative. In terms of grasping the market, according to experience, assuming that there is a wave of rising trend of 100%, then the transaction on the left side can achieve a 90%-100% increase at most, but this probability is very low, and the transaction on the right side can usually achieve To achieve a 60%-80% increase, the probability should be greater than 50%.
Points to note for transactions on the left and transactions on the right:
1. Precautions for trading on the left side (short-term):
①The transaction on the left is a profitable transaction, and you must unswervingly stick to the transaction on the left.
② The oil pipeline is smooth, and the main holdings are held.
③ When the stock price rises to the upper track of the upward channel, pay attention to reducing the weight.
④ When the stock price falls to the lower track of the upward channel, you must dare to buy.
⑤ If there is a small right side on the left side, dare to inhale.
⑥Pay attention to the distinction between rising relays and staged heads, and pay attention to the emergence of failure gaps and warning K lines.
⑦Pay attention to changes in the main control degree.
⑧The stock price falls below the lower track of the rising channel and is firmly out.
2. Matters needing attention on the right side of the road:
①Once the upward trend reverses to the right, you should decisively exit the short position and rest.
② If the oil path is unblocked, wait for the price to fall completely, do not open a position, and do not cover a position.
③Ignore all positive signals on the right side, it is a rebound, not a pull up.
④ If you are not out in time, the rebound on the right side is an opportunity to escape.
⑤ Pay attention to distinguish between a falling relay or a staged bottom.
⑥ When the stock price crosses the upper track of the downward channel, it is the time when the downward trend is reversed, especially if you look back and confirm that it does not break the upper track of the downward channel, you can actively go long.
Why can't the transaction on the left be full
The bottom identified in the transaction on the left is a hypothetical bottom, a bottom calculated based on experience. The judgment of the buying point on the left side is relatively less than that on the right side, and there are fewer references for judgment and reasoning, and the reference value of the quantity energy as "never lie" is also weakened due to the out-of-control market sentiment (sellers and buyers). All the current left-hand strategy algorithms are mainly empirical strategies based on historical data. An empirical strategy applicable to the overall market must have a certain degree of tolerance to adapt to the specific circumstances of individual stocks. The lower end of this tolerance range is likely to be 20%. Therefore, the bottom mentioned in the transaction on the left means that it is within the tolerance range of macro laws, not a specific point. Oversold is a state, not a signal; bottom is an area, not a point.
All the signals on the left mean that this position is worth fighting for. (If the conditional restrictions are relaxed in order to increase the number of strategy signals, not only the winning rate will decrease, but also the scope of tolerance will increase accordingly.) Therefore, the left side of the transaction naturally has high risk characteristics. In addition to adopting a strategy with more stringent screening conditions, it is also necessary to hedge risks through position control and effective replenishment strategies. A real master is not a good stock picker, but a good position control!
human weakness
People are born with a strong sense of insecurity about the uncertain future. On the way of the plunge on the left, any falling negative line may be the last straw that breaks the camel's back. If there is no material or spiritual support, collapse is a high probability event. It is almost impossible to overcome this fear without external force. The side can be carried to death, but there are very few people who can really withstand the fear brought about by the high risk on the left. Because the risk on the left side is high, the judgment is based on experience, which is almost a gamble. Therefore, you can't be full of positions, diversify funds, diversify investments, and do a good job in effective position management. Because fear is difficult to overcome, it is necessary to reserve positions to assist in overcoming it and maintain a good attitude.
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