We often hear some experienced traders say that right-side trading is safer and more reliable; but we also hear others say that actually left-side trading is more profitable and better suited for intervention. So what's going on? How should we choose?
To make an informed choice, we need to first clarify what left-side trading is and what right-side trading is?
First, we need to talk about trends, because left-side and right-side trading are closely related to trends and are in reference to trends.
For trend trading, we all understand that we should trade in the direction of the trend, because trading in the direction of the trend is safer and has a higher success rate; however, we often see that when a trend ends and it is fully confirmed that the trend has reversed, we often lose a large portion of potential profit.
Therefore, many traders will enter reverse trades when there is a certain basis and can roughly judge that it is a top or bottom, which is what we commonly refer to as left-side trading. Compared to the original trend, left-side trading is considered counter-trend trading, but it chooses the starting point of the new trend, and if judged correctly, the profits will be more substantial.
However, discerning people also understand that although left-side trading can yield substantial profits if judged correctly, no one can be sure whether it is the top or bottom before the trend is broken. Often, trying to catch the top or bottom can lead to losses, and this is considered a major taboo in trend trading by many traders.
Therefore, many experienced traders would rather give up profit space and wait until the trend reversal is confirmed before entering, which is what we commonly refer to as right-side trading. Compared to the original trend, right-side trading is considered trend-following trading, only entering after the original trend has been broken and a new reverse trend has been established, making it relatively safe and reliable.
However, for distinguishing left-side and right-side trading, many traders use historical charts to identify tops and bottoms for this distinction, which is actually unreasonable because that distinguishes using already formed tops and bottoms retrospectively. However, at every moment, it is almost impossible to accurately determine tops and bottoms. Therefore, a more reasonable approach should be—using trend-measuring standards to judge left-side and right-side trading.
As shown in the figure above, many traders will enter short on the left side of the "top" (red arrow), judging it as left-side trading, while entering short on the right side of the "top" is judged as right-side trading. This is actually unreasonable because at the moment of the "top," no one can confirm that this is indeed a top, so how can the distinction between left-side and right-side trading be made?
If a trend line is used as a tool to measure trends, as long as the trend line is broken, it can be determined that the trend has been damaged. Therefore, entering short on the left side of the trend line (yellow arrow) is left-side trading, while entering short on the right side of the trend line is right-side trading. This way, even at any given moment, one can determine whether they are engaged in left-side trading or right-side trading.
In the above figure, shorting before the "break of trend" is left-side trading; shorting after the "break of trend" is right-side trading.
Furthermore, one more point to note is that the left-side and right-side trading we refer to are relative to fixed cycles, because the judgment of trends varies for different cycles. Sometimes, a large cycle rises while a small cycle falls, or a large cycle falls while a small cycle rises. If the cycle is not fixed, it may appear that left-side trading is relative to the large cycle while right-side trading is relative to the small cycle, or vice versa.
Therefore, the judgments regarding left-side and right-side trading differ across different time frames.
So, having understood these points, is left-side trading better, or is right-side trading?
Firstly, we must also understand that each trader has different technical systems, which leads to different definitions of trends, and consequently causes each trader to have different measurement standards for left-side and right-side trading. In other words, different technical systems will have different determinations for left-side and right-side trading.
As shown in the figure, for the trend line trading system (yellow arrow) and the moving average trading system (black arrow), there are obvious differences in the judgment of left-side and right-side positions.
Although left-side trading also needs to be combined with trends, the technical system of left-side trading is actually a combination of counter-trend trading and trend trading. In other words, left-side trading focuses on predicting tops and bottoms, entering trades at the initial stage of a new trend formation.
Its advantage lies in the potential for large profit margins if judged correctly; its disadvantage is that it must bear greater risks than right-side trading.
Unlike left-side trading, right-side trading focuses more on trend following, not predicting tops and bottoms; as long as the trend is not broken, no reverse trades are made, and only after confirming that the old trend has been broken and a new trend has been established does one enter for trading.
Its advantage lies in a higher confirmation degree for trend reversals and safer entries; its disadvantage is that it requires giving up a considerable amount of profit space.
Therefore, we can see that left-side trading and right-side trading each have their own advantages and disadvantages; there is no absolute good or bad, it mainly depends on one's choice.
So, in this case, how should we make wise choices?
In fact, everyone should choose based on their own personality and technical system and other actual situations; what may suit you might not suit others, and what may suit others might not suit you. Therefore, choosing what suits you best is the best.
Here are some personal experiences I have summarized; you may refer to them.
We all know that trends can be strong or weak, so we can combine this point to adopt different strategies for different trends.
1. In a weak trend, if a top-bottom pattern or reversal candlestick pattern, or other reversal indicators appear, one can appropriately enter on the left side.
2. In a strong trend, one should predict tops and bottoms as little as possible, that is, do less left-side trading, because in a strong trend, the tops and bottoms or reversal candlestick patterns, or other reversal indicators that appear are often traps and will be swallowed by the inertia of the trend, so it is better to enter on the right side.
3. In the later stages of a strong trend, if a top-bottom pattern or reversal candlestick pattern, or other reversal indicators appear, it is possible to predict tops and bottoms appropriately at this time, choosing to enter on the left side, but be careful not to have too large a position to prevent the current level trend from expanding into a larger level trend and continuing forward.
In summary, different strategies should be adopted based on different trend inertias; if the trend is strong, the inertia is strong, and we should try to do more right-side trading; if the trend is weak, the inertia is weak, and we can appropriately do some left-side trading, so that we can safely obtain more profits.
In fact, for different trading cycles, each trade can be either left-side trading or right-side trading; and for most traders, they are neither absolute left-side traders nor absolute right-side traders, just slightly biased. Therefore, it is wise to adopt different strategies in different market environments, and I hope you can make wise choices to continuously improve your trading performance.
I am (Army Brother Crypto) with 6 years of deep cultivation in the cryptocurrency circle, where short-term gaming reveals the truth, and mid-long term layouts are systematic. Accurately capturing the optimal trading opportunities, I empower your investment decisions with first-hand information. Choose the right direction, find the right rhythm, and here is the professional perspective you need.
