What are left-side trading and right-side trading?

1. Left-side trading
   Left-side trading refers to a strategy in which investors purchase assets before the price hits the bottom or sell them before the price peaks. Simply speaking, it means purchasing assets before the bottom pattern is formed in the K-line chart, i.e. buying on the left side of the line trough, or selling assets before the top pattern is formed, i.e. selling on the left side of the line peak.
   Although left-side trading is performed before the price hits the bottom or reaches the peak, it seems less likely for the price to reverse to move against the anticipated direction. Generally speaking, counter-trend trading takes place in the late stages of a bull market, when traders invest to increase their positions at full swing. Then, a bear market ensues and catches the unfortunate investors stuck. As the market recovers, long-stuck investors buy high and sell low at the beginning of bullish trends, while starting to short positions in the middle and late stages of the bull market. For traders who rely on technical analysis, trading against the trend is the main reason for losing money
   To clarify, left-side trading is a prediction-based transaction, while right-side trading is a follow-trend transaction.

2. Right-side trading
   Right-side trading means that traders buy assets believing that the cryptocurrency price has reached the bottom within a certain period of time, or they sell assets thinking that the currency price has peaked.
   

Differences and Connections

• Differences

1. The left-side trading results from traders’ subjective forecasting of the market trend, while right-side trading is an objective reaction to the actual price change.
2. What lies behind left-side trading is a reverse thinking mode, while it is the forward-going mindset that supports the logic of right-side trading.
3. In left-side trading, traders take action expecting that the currency price moves in the opposite direction to the current one. Traders who perform right-side trading anticipate the currency price moves in the exact direction in which the market is pointing towards.
4. The essence of left-side trading is to “buy low, sell high”. Specifically, traders buy assets at a low price and sell them to profit when the price is about to peak. Right-side trading means increasing positions when the coin price rises and selling assets after the price peaks and starts to fall. So the logic behind trade following-trend is to “buy high, sell low”.
5. Left-side trading is fit for large investors who are more financially solid, while right-side trading is a more suitable tool for small and medium investors.
6. When performing left-side trading, the most common mistake made by investors is to buy coins in the middle adjustment of a bear market and sell them in a bull market’s middle adjustment. In right-side trading, traders would suffer a loss if they buy assets in the bear market rally and sell the assets in the bull market adjustment.
7. Compared with right-side trading, left-side trading would be more profitable, while also entailing greater risks.
8. Traders who perform left-side trading believe that the price is now at the bottom or the top, while the assumption behind right-side trading is that the price has already peaked or bottomed.

• Similarities

1. Be it left-side trading or right-side trading, traders should stick to the principle - never trade countering the trend.
2. The two trading methods adopt the same trend analysis rules. To sum up, the difference between the two methods only lies in the timing of buying or selling assets. Except that, the use of the trading indicators and trends analysis methods do not differentiate between the two trading methods .

• Misunderstandings about left-side trading

1. Left-side trading is counter-trend trading.
   Left-side trading is performed based on forecasting the direction of the crypto market, requiring traders to take action based on the prediction that the price will change at a critical moment and position.

2. Left-side trading is a value investment.
   Value investment is conducted based on a fundamental analysis of the market, requiring investors to increase positions at a lower end. The lower the price, the more positions will be opened. But the timing of left-side trading is judged based upon the technical analysis of the market, so investors should decisively sell assets to stop loss if their prediction is proved wrong.

Application

1. Right-side trading is unsuitable when traders intend to take advantage of a rally in the bear market. Even if it is a rally in the monthly line, the most common case is to buy high and sell low.

2. The two trading methods are not suggested to be used in combination.

3. Other trending signals should be used as a supplement to increase the win rate.

Trading cycle and position management

1. Why position management is necessary:
   1. Reduce losses and increase profits;
   2. Facilitate the execution of buying and selling the assets.
   3. It is conducive to stabilizing mood and avoiding the increase of losses.

The principle is to invest all assets in a bull market, and short positions in a non-bull market. The specific application as well as the position management rules are as follows:

1. In a long-term upward trend, if the cryptocurrency price breaks through the short-term or medium-term downward trending lines, it is a signal to buy assets and increase positions. If the currency price falls below the short-term or medium-term upward trending lines, it is a signal to reduce positions. If the currency price runs above the long-term upward trending line, it is a signal to hold positions.

2. When the currency price falls below the long-term upward trending line, it is a signal to liquidate positions. If the currency price runs below the long-term downward trending line, it is a signal to short positions.

3. When the currency price breaks through the long-term downward trending line and is supported by the medium-term upward trending, it is a buying signal; if the cryptocurrency price falls below the medium-term upward trending line, it is a signal for liquidating positions.

The use of a single technical analysis method can not help traders to completely reduce risks and increase profits. In practice, traders can use other trend technical analysis methods as a supplement for better risk management.

Summary

The left-side trading and right-side trading are two different trading styles that adopt radically different thinking logic. At the core, they require traders to predict the trend movement using technical analysis and then trade based on the prediction. They are a useful tool for beginners in the crypto market to better judge the timing of buying and selling assets, especially when they are used in combination with other technical analysis methods.

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Disclaimer

Please note that this article is for informational purposes only and does not offer investment advice. Gate.io cannot be held responsible for any investment decisions made. The information related to technical analysis, market judgment, trading skills, and traders’ sharing should not be relied upon for investment purposes. Investing carries potential risks and uncertainties, and this article does not guarantee returns on any investment.