Left-side or right-side trading. Which is better?
Stock prices fluctuate up and down, forming tops and bottoms. There are 2 types of trading. Left-side and right-side. Which is better? I will discuss this below. It is assumed that a stock is bought at the day's low and sold at the day's high.
Right-side trading
Right-side trading involves buying on the right side after reaching the bottom and selling on the right side as prices fall from the top. When a stock is in a downtrend, right-side trading entails buying as prices rise from the bottom. When it is in an uptrend, right-side trading entails selling high on the right side after reaching the top.
I will use $Top Glove (BVA.SG)$ as an example to illustrate the differences between left-side and right-side trading.
The bullish MACD crossover generated a buy signal at 0.225. And the bearish MACD crossover generated a sell signal at 0.33. These are due to MACD's lagging effect.
Left-side trading
Left-side trading occurs when one buys low on the left side before reaching the bottom and one sells high on the left side before reaching the top. When a stock is in a downtrend, left-side trading entails buying low on the left side just before reaching or at the bottom. When it is in an uptrend, left-side trading entails selling high on the left side just before reaching or at the top.
Using the same chart above, Top Glove fell to the support zone of 0.215-0.225. A buy signal was generated at 0.22. A sell signal was generated at the resistance of 0.365. Also, RSI was very overbought at 84.87.
Right-side trading vs left-side trading
1) Profit potential
Left-side trading yielded a profit of (0.365-0.22)/0.22x100% = 65.91%
Right-side trading yielded a profit of (0.33-0.225)/0.225x100% = 46.67%
If there was a big price rise in the few days after the bottom or a big drop in the few days after the top, right-side trading would yield a lower profit.
In general, left-side trading yields a higher potential profit. But it carries greater risk in that you may buy or sell too early. Therefore, lowering profit. Always have your stop loss strategy of 10% ready if things go wrong.
2) Technical analysis.
Left-side trading involves buying against the trend, while right-side trading follows the price trend which lowers the risk.
Right-side trading only uses the MACD indicator, MA and chart patterns. So it is simpler.
Left-side trading uses more technical indicators, supports, resistances, uptrend and downtrend lines, RSI, MA, chart patterns etc. It is more complicated and one must have a higher TA skill level. Also must perform fundamental analysis and keep abreast of the latest news.
Conclusion
I am a left-side trader as I use my TA skills to try to catch swing bottoms and tops. I'm willing to take the higher risk to obtain higher potential profits. Which trading style you adopt depends on your risk profile and TA skill.
Please smash the like button if you enjoy reading. All related questions are welcome.
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bullrider_21 OP 101572862 : np disciple.
Trytosaveabit : Great explanation! I prefer LS but it really depends on what and when I see it. My issue is I have a hard time telling myself No and can’t let a great trade opportunity pass! Hehehe. I guess I would say my swings are LS and my Day, Momentum/scalp trades are RS! Thanks @bullrider_21 Always enjoy reading you!
bullrider_21 OP Trytosaveabit : Glad you enjoy reading my articles. Everyone shouldn't let a great trade opportunity pass. It's good that you take on less risk when you're doing RS.
羊圈圈 : Left-side trading is more likely to predict the direction of the stock market, but who can make accurate predictions? Of course, right-side trading will also encounter market reversals or false signals.![[undefined]](https://static.moomoo.com/nnq/emoji/static/image/default/default-black.png?imageMogr2/thumbnail/36x36 "undefined")
bullrider_21 OP 羊圈圈 : Accurate predictions depend on your TA skill.
羊圈圈 bullrider_21 OP : Yes, but if you can100%Exactly, you'll be richer than Buffett.![[undefined]](https://static.moomoo.com/nnq/emoji/static/image/default/default-black.png?imageMogr2/thumbnail/36x36 "undefined")
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