In the realm of financial markets, investors are frequently confronted with a pivotal decision: should they opt for left-side trading or right-side trading? Each trading strategy has its distinct characteristics, advantages, and disadvantages.

Left-Side Trading: Entering the Market Early Despite Uncertain Future Trends

Example: Bottom fishing.

Right-Side Trading: Entering the Market After Trend Confirmation

Example: Momentum trading.

Pros and Cons of Left-Side Trading

One of the significant advantages of left-side trading is the potential for substantial profit if the entry point is correctly identified. By entering at the inflection point, investors can capture the entire upward movement, which is why many are enthusiastic about bottom fishing.

However, the major drawback is the need to bear unknown levels of risk. If the trade goes wrong, setting a stop-loss point can be challenging, often leading to emotional resistance and reluctance to cut losses, resulting in holding onto losing positions.

Initially, I was also fond of bottom fishing because a successful trade brought immense satisfaction. However, the most stressful experience was holding onto losing positions, hoping the price would bottom out, only to see the market continually hitting new lows, pushing my psychological limits. Eventually, I couldn't take the pressure and exited the position.

Left-side trading involves buying during a price decline or selling during a price rise.

Advantages include:

1. Potential for Lower Entry Prices: Entering before the market hits the bottom, allowing for higher profit margins.
2. Early Market Entry: Opportunity to capture the early stages of a trend.

Risks include:

1. Increased Uncertainty: Difficulty in determining if the market has truly bottomed or peaked.
2. Longer Holding Periods: Necessity to wait for the market to reverse.

To mitigate these risks, it's advisable to use an indicator to set a stop-loss line, such as the Golden Ratio for an undefined bottom. This strategy is yet to be tested as I have transitioned to right-side trading.

Pros and Cons of Right-Side Trading

Right-side trading, entering the market after a segment of the trend is established, has its drawbacks. The profit margin is typically smaller compared to left-side trading. Additionally, in a choppy or fake breakout market, it may lead to multiple stop-outs, affecting investor confidence.

However, the merits of right-side trading include the ability to use previous high and low points as anchors to set profit and stop-loss levels. This clear position can guide subsequent trades and create a plan where at least the maximum potential loss is known, providing a psychological safety net. Trading is about exchanging bearable risks for returns, and since market changes are unpredictable, controlling potential personal risks is the trader's primary equipment and skill set.

Right-side trading involves entering the market after a clear price reversal.

Advantages include:

1. Risk Reduction: Entering after market trends are confirmed minimizes risk.
2. Easier Trend Identification: Trading based on already established trends.

Disadvantages include:

1. Potentially Missed Profits: Entering the market later means some price gains are already realized.
2. Requires Quick Reaction: Necessitates prompt actions to follow market trends.

How to Choose?

It depends on several factors:

1. Risk Tolerance: Investors willing to take on more risk may favor left-side trading, while conservative ones may prefer right-side trading.
2. Trading Style: Some prefer positioning early, while others wait for clear trends.
3. Market Conditions: Different market phases may call for different strategies.

Regardless of the chosen approach, it is crucial to:

1. Develop a Clear Trading Plan: Including entry and exit rules.
2. Manage Risks: Use appropriate stop-loss and position management.
3. Continuous Learning: Enhance trading skills and knowledge.

Ultimately, no single strategy fits all scenarios. Investors should adapt their strategies based on personal circumstances and market conditions, continually learning from practice to find the most suitable trading method.