Left-side trading is a type of trading in the stock market that can help you make money if you use it in a sophisticated way. For example, when the stock market collapsed around March 2020 due to Covid-19, some value investors or investors who wanted to take a bottom bought at that time, and if the price continued to fall, they bought at a lower price, continued to fall and added more until the market went up, and then these investors were able to profit from the market. In addition to the above, price consolidation is also beneficial for left-side traders, especially short-term traders, including hedgers, or short-term traders of stocks.
A left-side trade may be able to succeed or it may trade to failure. But what if the market goes all the way down? When you keep buying at the relative low of the price and the subsequent price continues to go down, making the entry price of the stock a relative high, and the price keeps going down without seeming to see a bottom, this is when the investor loses money. Especially when it comes to futures and options, trading these trading varieties on the left side can lead to all kinds of failures, this is because investors can easily end up with the entire formation because they add more and more losses to amortize their costs. But it is also interesting to note that trading on the left side is perfectly in line with human nature. Why is it so?
Just like when we go out to buy things, we will like to buy one get one free, 20% off this kind of activity, and when we see the goods on sale, people always like to buy more; so investors are also very easy to "like to buy cheap" this mentality, used to invest in the trading market, see the stock price in " discount", it will feel that this time to buy very profitably, cheap time to buy more and more money, so it will be easy to use the concept of left-side trading. There are many examples of investment failures are left-handed traders in the stock price down when Buying a call, even if the price continues to fall will continue to Buy the call completely using the thinking of the left side of the transaction to make a single, because of the direction of the wrong look, and finally all to zero. Therefore, this article again reminds you that if you are doing futures options, foreign exchange margin trading, overseas futures and other such types of commodities, it is recommended that you do not develop the behaviour of trading against the trend and increase the cost of amortization, which is a very dangerous practice.
The aforementioned unstable stock that has been falling will also let the left-handed traders can not guess the lowest price said to down will let the left-handed traders guess the bottom of the lower and lower, relatively speaking, all the way up the market will also encounter the same situation. The price goes all the way up, allowing traders on the left to guess the top and sell at the highs through technical indicators, shorting while finding that the price is getting higher and higher, which in the end will make you lose all your trades just the same.