Left-side trading and right-side trading are two entirely different operational logics in the market. The former is a contrarian layout of 'being greedy when others are fearful', while the latter is a trend-following based on 'going with the trend'. For ordinary retail investors, understanding the essential differences between the two is crucial to finding a trading path that suits them better.
1. Left-side trading: The 'value investment' logic of contrarian layout
The core of left-side trading is contrarian thinking, commonly referred to as 'value investing' — that is, when the target (stock/cryptocurrency) drops to a low valuation with a high margin of safety, gradually buy in; the greater the decline, the stronger the accumulation. Its profit logic is 'waiting for time and capital cycles': through the restorative rise of the target's value, realize its intrinsic value.
Why is left-side trading unsuitable for most retail investors?
Investment tycoons (such as Buffett) are good at left-side trading, but retail investors blindly follow, often falling into 'deep pits'. The core reasons are twofold:
1. The value range is hard to control: the information disadvantage of retail investors
Retail investors engaging in value investing often fall into 'false propositions'. Major institutions have professional teams conducting research and possess more comprehensive information; even so, research reports may still be distorted. Retail investors rely on public information for predictions, often judging the 'reasonable value range' based on experience and even blindly. Many retail investors buy in because they 'believe their performance is good', only to find that not only does the stock price drop, but the performance may also change — the information gap puts retail investors at a natural disadvantage in value judgment.
2. Time cycles lack patience: the mismatch of mindset and capital attributes
Large funds engage in left-side trading as 'active layout', while retail investors often find themselves 'passively stuck'. Large funds have a plan for the time cycle and can build positions in batches during a decline, waiting patiently; retail investors often hold passively due to being 'stuck', and once they are free, they can't wait to sell. The cycle of left-side trading is often long, and retail investors will gradually doubt during declines, hesitating during rises, suffering both mentally and physically, ultimately failing to hold their targets. More critically, time has a cost — retail investors can choose targets that are currently rising without having to 'endure the cycle' with large funds.
In addition, large funds are substantial in size, and left-side trading can collect more chips during panic sell-offs; retail investors have smaller amounts of capital and do not need to bear the pressure of 'not being able to buy enough chips', instead, they should leverage the advantage of 'small boats being easier to turn around'.
Of course, retail investors are not unable to engage in left-side trading — if they have in-depth research on a certain company and clearly understand its future growth potential, it is also feasible to layout during a decline. However, the premise is 'having clear performance expectations', rather than merely guessing the trend based on historical performance.
2. Right-side trading: The 'trend investing' logic of going with the trend
Right-side trading, commonly known as 'trend investing': intervening when the target shows a clear upward trend, following the funds 'going with the trend', from low valuation speculation to high valuation. Its core is not waiting for value to be restored but capturing the trend premium driven by capital, making capital utilization more efficient and more suitable for retail investors.
The core advantage of right-side trading
The essence of rising stock prices is 'capital preference' — unrelated to performance or themes, only related to the willingness of capital to enter. Right-side trading is precisely 'following the trend of capital', thus possessing three major advantages:
1. Avoid floating losses and stop-loss risks
Left-side trading involves buying during declines, which inevitably leads to floating losses, and floating losses can turn into real losses (e.g., forced to sell due to urgent need for funds). Right-side trading intervenes after the trend is clear, reducing the probability of 'being passively stuck' and minimizing unnecessary losses.
2. Reduce the probability of stock selection errors
Retail investors have weaker judgment regarding the quality of their targets, while the choices made by large funds are more informative. Large capital will conduct in-depth assessments before intervening and will not blindly take over — choosing stocks by following the funds is essentially 'borrowing professional power to avoid pitfalls', and the probability of making money is far higher than just guessing based on fundamentals.
3. Easier to hold onto targets, pursuing maximum profit
After buying into right-side trading, if the price continues to rise, retail investors' mindset is more stable, and their holding period is often longer than in left-side trading. Even if they sell early due to 'fear of heights', the returns are still higher than in left-side trading where they 'sell as soon as they are free' — after all, once a trend is formed, the continuity of the target's rise is stronger.
The 'iron rule' of right-side trading
Veterans often advocate right-side trading, but doing it well is not easy. The core is 'waiting for signals, not blindly chasing prices', and four iron rules must be followed:
1. Trend breakthroughs need confirmation
There are three signals for a trend breakthrough, and none can be missing: ① The stock price creates a short-term new high; ② Breaks through long-term trend resistance; ③ The moving average turns upward. Right-side trading must wait for the signal to be clear before entering and should not engage in premature positioning.
2. Trading volume must increase
The establishment of an upward trend must be accompanied by increased volume (funds entering), while the end of the trend is accompanied by decreased volume (funds exiting). Trading volume is the 'thermometer' of the trend; a breakthrough without increased volume is often an illusion.
3. Stay calm in the face of false breakthroughs
If you encounter a 'false breakthrough' (continuously dropping after a breakthrough) after buying, do not add positions. For long-term targets, you can patiently wait for the next trend signal; for short-term targets, be prepared to stop-loss.
4. After missing out, wait for a pullback to add positions
If you hesitate and miss the buying point after the trend starts, do not blindly chase high prices. Wait for the trend channel's slope to become clear and add positions when the stock price pulls back — avoid chasing at high points due to 'too steep a slope'.
3. Which type should retail investors choose?
The essence of right-side trading is 'the resonance of capital clusters': when capital forms a consensus, the trend will generate short-term premiums. For retail investors lacking investment research capabilities, right-side trading is a wiser choice — there's no need to blindly believe in the left-side logic of tycoons, as 'going with the trend' aligns better with the capital attributes and mindset of retail investors.
A bear market may require a left-side setup, but the biggest advantage of retail investors is their 'flexibility'. Making good use of this advantage and following the trend of funds can more efficiently seize profit opportunities.
