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What is a left-hand transaction and a right-hand transaction
Trading on the left side, also known as contrarian trading, refers to the transaction in which the direction of the small-level trading is opposite to the trend direction of the large-level among two adjacent levels. ;The transaction on the right refers to the transaction in which the small-level trading direction is the same as the large-level trend direction, that is, chasing in at the beginning of the market rise and leaving the market at the beginning of the market decline.
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The characteristics of the transaction on the left
Trading in the opposite direction of the general trend is the most prominent feature of the left side trading, buying in a downtrend and selling in an uptrend. In the process of falling, gradually buy in batches to continuously reduce the cost of opening positions. In the process of rising, take profits step by step to reduce positions and leave the market.
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Features of trading on the right
Trade in the direction of the trend, go long when the general trend rises, and short when the general trend falls. Trading with the trend on the right side has higher certainty, and trading on the left side has to bear the risk of whether there is a turning point, while trading on the right side is much easier. It's like when we stand on an ascending elevator, even if we don't move, there is an external force pushing you up. This is the case for trading on the right side. The overall environment is suitable for long positions, and the success rate of long positions is naturally high.
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Comparison of the two trading methods
Because asset prices are unpredictable, many investors think that the right system is better than the left system. This is a misunderstanding, mainly based on Newton's law, and moving objects have inertia. It is believed that the underlying price will maintain its original trend during the process of rising and falling. For example, the system on the right sends out a buy signal during the rising process and a selling signal during the falling process. This is based on this theory, and it is believed that the rising The underlying object has a high probability of subsequent rise, and the underlying object that has fallen has a high probability of subsequent decline. But Newton's law is aimed at an ideal state. In the real material world, there are very few people who move in this way, and many movements show irregular movements.
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How to judge the two trading methods?
1. Direction
If the trading direction is consistent with the trend direction, it means trading on the right side, and if it is inconsistent, it means trading on the left side.
2. level
Whether the transaction is left or right, only pay attention to the trend direction of this level and the adjacent freshman level, and has nothing to do with the trend of other levels. For example, if the weekly line is in a downward trend and the daily line is in an upward trend, if you go long on the 30-minute line, it is also called trading with the trend, or trading on the right side; if you are doing long on the daily line, it is called trading against the trend, or trading on the left side.
3. Phases of a trend
Trends are generally divided into three stages, early, middle, and late. Strictly speaking, long left-side trading can only occur in the late period of the downtrend. In short, only the counter-trend trading at the end of the down-trend is called left-side trading, and the counter-trend trading in the early and mid-term of the down-trend is called suicide trading. Long right-hand trading can only occur in the early and middle stages of the trend. At the end of the trend, even if the trading direction is the same, it cannot be counted as right-hand trading. Because the purpose of our trading is to make a profit, and a transaction with a small profit probability is not a good transaction.
From the above discussion, we can find that the transaction on the left side and the transaction on the right side are complementary. Without the transaction method on the right side, the safety of funds cannot be fully guaranteed, and the value of funds cannot be effectively increased. When the amount of funds is large enough To a certain extent, the importance of trading on the left side is gradually reflected. If there is no accurate prediction of what may happen in the future, it will be reduced to extinction just like those institutions and individuals eliminated by the market.
