Guide: There have been many controversies in the market about the advantages and disadvantages of left-hand trading and right-hand trading, and there are also their own fans and believers. Today, the editor will explain their respective characteristics for everyone, so that everyone can better choose a trading strategy that suits them.
left trade
Trading on the left side, also known as contrarian trading, directly enters the market against the market when the price reaches or is about to reach a certain important pressure level or resistance point, without waiting for the price to change.
Representative: Buffett
Buffett famously said: Be greedy when others are fearful, and be fearful when others are greedy. It proves that Buffett is a typical left-handed trader, which can be seen from his famous trading sayings of greed and fear, and can also be proved by his purchase of PetroChina stocks in the past.
Technical characteristics of the left transaction:
When the price reaches or is about to reach a so-called important pressure level or resistance point, it will directly enter the reverse market without waiting for the stock price to change its trend.
The reason for entering the market on the left side of the transaction: if the price is attractive, buy it.
When the price is falling, it is not clear when the bottom will appear, but I feel that the price is reasonable, attractive enough and with a margin of safety, so I choose to buy.
The technical meaning of the transaction on the left:
The logic of the transaction on the left: the price becomes attractive, and early entry is worth the money.
The secret to winning trading and investment on the left side is: in a confirmed bull/bear market, enter the market every pullback/rebound.
The fear of the capital market is that after a sharp drop, the market will not care about the pain and suffering of investors, and will not fall anymore.
Investors who can often outperform the market are: investors with left-hand trading thinking.
The left side trading usually leaves the market: break the 5-day moving average, leave the market in the short term; if the moving average is broken, leave the market in the middle line.
The downside of trading on the left: When you open a position, you don't really know if the price move will continue or not.
Conditions of use for transactions on the left:
The funds used must be spare funds.
Able to withstand floating losses and keep funds within the margin of safety.
Be mentally prepared to hold positions for a long time, and don't stop losses easily.
right side deal
Trading on the right side, also known as trend-following trading, is to buy after the bottom of the down phase appears, or sell after the top of the up phase appears. The trading on the right does not need to predict when the bottom and top will appear, but the behavior of trading after the bottom and top appear, and then conduct trading operations. Therefore, trading on the right side is also called the right hemisphere theory, that is, following the trend, never operating against the trend, and not predicting the future.
Main representative: Gann
Gann's most representative famous saying: As long as the direction does not change, your homeopathic order is correct.
Technical characteristics of the right side of the transaction:
When the price has fallen from the high point or recovered from the low point, enter the market again.
Never predict the trend of the market, but patiently wait for the market to give an answer; operate after the trend turns.
You can't buy at the lowest point, and you can't sell at the highest point, but you can ensure that you won't miss the big trend.
Reason for operation: The short-term high and low points of the price have passed, and the turning point of the trend has appeared.
The technical significance of the transaction on the right:
The basis for buying and selling on the right side of the transaction: whether the target has the momentum to continue upward/downward. Once the kinetic energy is determined, enter the market immediately. Once the price is required to be adjusted, immediately exit the position and never keep the order.
Clear trend, buy on the right or sell on the right. Follow the trend, only operate when there is a clear trend, and do not operate if there is no clear trend.
The pursuit of trading on the right is to "chasing up and killing down", although it is often "a step behind", it is relatively safe.
For traders on the right side and middle-line traders, the risk comes from rising, the opportunity comes from falling, and the adjustment is for a better rise in the future.
The dispute between left-handed trading and right-handed trading
In the figure we can see:
When falling, the bottom is used as the boundary. Anyone who sucks low on the left side of the "bottom" belongs to the left side of the transaction, while chasing up after bottoming out belongs to the right side of the transaction. The opposite is true within the price rise range.
In layman's terms: the principle of trading on the left is to sell high and buy low, and the principle of trading on the right is to chase the rise and kill the fall. The left side of the transaction values forward forecasting, and the right side of the transaction emphasizes following the trend. Trading on the left is a game for a few masters, while trading on the right is a practice mostly adopted by the majority.
The difference between left and right transactions
There is no difference between right and left trading
Because the price is unpredictable, many investors think that trading on the right is better than trading on the left. This is a misunderstanding, mainly based on Newton's law, and moving objects have inertia (of course, economics also encounters the law of inertia) . But Newton and economists aimed at an ideal state. In the real world, after all, very few people move in this way, and many movements show irregular movements. Just like the microcosm and the macrocosm are different worlds.
It is difficult to say which trading method is suitable for investors with a certain trading style. It is generally believed that trading on the left is more suitable for long-term or medium-term value investors, while trading on the right is more suitable for short-term traders.
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