The Trading Rules That Very Few Understand: Left Side vs Right Side, Choosing Wrong = Wasted Effort!
Core Difference
Left Side Trading (Contrarian Investing): Gradually buying in when the asset falls into an undervalued area, waiting for value to return. Suitable for investors who can conduct in-depth research on companies and endure long-term floating losses.
Right Side Trading (Trend Investing): Entering after the upward trend is established, going with the flow. Suitable for ordinary investors who seek capital efficiency and lack research capabilities.
Why Should Retail Investors Be Cautious with Left Side Trading?
1. Valuation Blind Spot: Retail investors find it difficult to accurately assess a company's true value and often buy at a halfway point.
2. Time Cost: After being passively trapped, the mindset can easily collapse, often leading to premature selling during the relief, missing the rebound.
3. Financial Disadvantage: Institutions can dilute costs, while retail investors have limited ability to average down, making it hard to recover after sharp declines.
Three Major Advantages of Right Side Trading
1. Efficient Trend Following: Directly riding on the trend driven by funds, avoiding a lengthy bottoming period.
2. Controllable Risk: Entering during an upward continuation, reducing the risk of being deeply trapped, and making stop-loss discipline easier to execute.
3. Stock Selection by Momentum: Funds pouring in essentially endorse the fundamentals, with a higher win rate than individual subjective judgments.
Four Principles of Right Side Trading
1. Triple Breakthrough: New price highs + trendline breakthrough + moving average turning, none can be missing.
2. Volume Verification: An increase without volume is often a trap for the bulls; a true trend must come with volume.
3. Reject Averaging Down: Immediately stop-loss on false breakthroughs, do not average down losses.
4. Add on Pullbacks: If the starting point is missed, wait for a second pullback to avoid chasing high peaks.
Summary
Retail investors should leverage their strengths while avoiding weaknesses—focus on right side trading by using flexible capital advantages, rather than mimicking institutional left side layouts. Remember: The trend is the only informational advantage for retail investors; instead of guessing the bottom, it's better to wait for the wind to come.
