1. Timing the Trade
- In an uptrend, the buying point for right-side trading usually comes after the stock price (or the price of other financial assets) breaks through significant previous resistance levels. For example, if a stock hovers around 30 yuan for a while, forming a clear consolidation area. When the stock price breaks above the 30 yuan resistance and is accompanied by increased trading volume, right-side traders believe the uptrend is confirmed and choose to buy. They believe that once the price breaks through the resistance, it is likely to start a new upward trend.
- In a downtrend, the sell signal occurs after the price falls below significant previous support levels. For example, if a stock had been steadily above 50 yuan, 50 yuan becomes a key support level. When the stock price drops below 50 yuan, and the market atmosphere and technical indicators also show weakness, right-side traders will decisively sell to avoid further losses from price declines.
2. Use of Technical Indicators
- Moving Averages: Commonly used short-term moving averages include 5-day, 10-day, and 20-day averages. In an uptrend, when a short-term moving average (like the 5-day average) crosses above a long-term moving average (like the 20-day average), this is considered a strong buy signal. For example, on a stock price chart, if the 5-day average was originally below the 20-day average and begins to cross above it as the stock price rises, it indicates strong momentum for short-term price increases, and right-side traders may enter based on this signal.
- Relative Strength Index (RSI): The RSI ranges from 0 to 100. When the RSI rises from the oversold area (generally considered oversold if RSI is below 30) and exceeds 30, it may be a potential buy signal for right-side traders; conversely, when the RSI falls from the overbought area (usually overbought if RSI is above 70) and drops below 70, it may be a sell signal. For example, if a stock's RSI falls to around 20 and then begins to rebound, showing signs of stabilizing price recovery, it will attract the attention of right-side traders, who wait for further confirmation of the upward trend before buying.
3. Comparison with Left-Side Trading
- Risk Characteristics:
- Left-side trading attempts to position itself before a clear trend forms, such as buying before the stock market bottom is fully confirmed. This trading method can buy at the lowest price, but it also faces the risk of further price declines because the bottom may not have truly arrived. Right-side trading enters after a trend is clear; although the buying price may be higher than the lowest price of left-side trading, it reduces the risk of suffering ongoing losses in uncertain bottom areas.
- In terms of selling, left-side traders may start selling before the market top is fully formed, fearing an imminent price reversal. However, they may miss subsequent upward movements. Right-side traders sell only after the price has clearly fallen below key support levels, avoiding premature exits that cause them to miss profits, but they may incur greater losses if they do not sell in time.
- Profit Potential:
- If left-side trading successfully captures bottoms and tops, its returns can be very high because they operate at extreme price points. However, the probability of such success is relatively low because accurately predicting bottoms and tops is extremely difficult. Right-side trading has relatively stable profit potential, mainly capturing trends after they form. For example, in a stable uptrend, right-side traders can gradually profit as prices rise; although each gain may not be maximized, the overall success rate may be relatively high.
4. Applicable Scenarios and Limitations
- Applicable Scenarios:
- For markets with clear trends, right-side trading is more appropriate. For example, in a bull market where the main index continues to rise and break through previous highs, right-side trading allows investors to effectively keep pace with the market's upward momentum by buying quality stocks that have broken through resistance levels to gain profits.
- For investors who do not have enough time and energy to delve into the fundamental and technical analysis details of the market, right-side trading is also a relatively simple and understandable strategy. They do not need to spend a lot of time guessing the market's bottoms and tops; they only need to focus on whether the price breaks through key levels.
- Limitations:
- Right-side trading may miss the early stages of a trend. For example, in the early stages of a rapidly rising bull market, investors waiting for the price to break through resistance may miss the initial wave of gains.
- There can be false breakouts. Sometimes the price appears to break through key resistance or support levels but then quickly reverses. For instance, if a stock's price breaks above a previous high, attracting right-side traders to buy, but then due to sudden market news or changes in major funds, the price falls back to pre-breakout levels, resulting in right-side traders being trapped.