Left-Side Strategist - Trend Identification, Chart Patterns
I am a believer of Technical Analysis as seen in my article, I used different indicators and chart for trend analysis. So before I shared and explain some of the analysis that I have posted recently.
I think we need to understand what is Left-Side Trading?
What is Left-Side Trading?
Left-side trading is a technical analysis approach that focuses on analyzing historical price action up to the present moment without considering potential future movements. The term "left-side" refers to the left side of the price chart, which displays past market data.
Traders using this method rely heavily on historical patterns, trends, and support/resistance levels to make trading decisions, under the assumption that historical market behavior can offer insights into future price movements.
Trend Identification - Using KDJ
Recognizing and aligning with existing market trends is crucial in left-side trading. In the following example of $Broadcom(AVGO.US$ , I look for established trends and make trades in the direction of these trends, capitalizing on the momentum.
As seen in the KDJ chart below that I have shared in How We Can Trade Broadcom (AVGO) Upcoming Stock Split on 13 June 2024, there is a very clear signal from KDJ with the J value rising. And the price close on 13 June is around $1704.
At pre-market price today of around $1820, that will be a handsome gains of 6.8%, in less than 5 trading days.
Chart Patterns
As left-side traders we also pay close attention to chart patterns such as head and shoulders, double tops and bottoms, and triangles. Using these patterns help to provide clues about the potential market directions based on past behavior.
Using the same example of Broadcom, we could see an ascending wedge if we were to draw trend lines joining the higher-high and lower-low, as we know that ascending wedge is a bearish pattern if there is accompanying declining volume.
But if we looked the chart below, we are seeing rising volume (from the buying and selling strength) after the earnings for Broadcom, I personally take this as a confirmation of an upside trend.
Why Do Traders Use Left-Side Trading?
The advantages of Left-Side Trading covers the following factors and this is something that can eliminate a lot of the guesswork.
Data-Driven Decisions: Left-side trading relies on empirical data rather than speculation, providing a more grounded approach to trading. This data-driven methodology can lead to more consistent and reliable trading outcomes.
Reduction of Emotional Bias: By focusing strictly on historical data, traders can reduce emotional biases that often lead to impulsive decisions. This objective approach helps maintain discipline in trading strategies.
Enhanced Predictability: While the market is inherently unpredictable, historical data can offer patterns and trends that suggest probable future movements. Left-side trading leverages these patterns to make informed predictions.
Foundation for Technical Analysis: Left-side trading forms the backbone of many technical analysis strategies. It provides a solid foundation for understanding market behavior and developing more complex trading systems.
Summary
While left-side trading offers numerous benefits, it is not without challenges and limitations. One of the significant limitation is that past performances is not always indicative of future results.
Market conditions can change due to various factors such as economic news, geopolitical events, and not forgetting changes in market sentiment.
We need to remember that left-side trading remains a fundamental approach within the realm of technical analysis, providing traders with a robust framework for making informed decisions.
Over-reliance on historical data can sometimes lead to missed opportunities or losses if the market behaves unpredictably.
I feel that sometimes we need to have a bit of right-side reaction to help us to mitigate some of the risks and also not to miss opportunities that might arises.
Appreciate if you could share your thoughts in the comment section whether you think one can be more towards left-side strategist but at times, deploy right-side reaction to take advantage of some opportunities?
Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.
Disclaimer: Community is offered by Moomoo Technologies Inc. and is for educational purposes only.
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Use A.I. to pick stocks.
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Money Thrill : Good Approach. I followed 30 years ago 10 years TA . It was than with fax Machine. So I see that TA was good but always a few days to late, 2 or 3 ... to see the Trend. So I begin to look at long term 5 years, then 3 years, 9 months, 6 months, 3 months, Daily averages and fundamentals and ROIC . Also the sentiment. Now I think that the Sentiment is the best evaluation because Feelings Come before thought processes but TA is also a fundamental feeling. Following the general consensus
AnnYeo God of Money : great sharing! check out mine too and mind to leave a comment for the 200 points! thanks
nerdbull1669OP AnnYeo God of Money: done, luck does play a part when we trade but so far o learn that we can overcome the risk with TA. Still learning to make the risk lesser lesser
AnnYeo God of Money nerdbull1669OP: thanks bro! yea, same here... still learning as well...
Money Thrill : And I too, I am learning every Day... an never Ending story in Lifetime
