Trading Concept Handbook (Part 8): Understanding Trend Structure & Left and Right Side Trading

The Trading Concept Supplement Series aims to share some “rarely mentioned but extremely important” trading concepts. I believe that both newbies and crypto veterans can take away something from this series of articles. There are a total of 10 articles in this series, and this is the 8th one. (Recap: Trading Concept Supplement (Seven): The Correct Starting Point for Small Capital) (Background Supplement: Trading Concept Supplement (Six): Target Management and Benchmark) The Spectrum of Left Side and Right Side First of all, left side and right side trading is itself a concept of a “spectrum”; there are no absolute boundaries, but rather distinctions in degree (more left or more right). Left Side: Fewer confirmation signals, lower win rate, greater potential profit Right Side: More confirmation signals, higher win rate, smaller potential profit I made a chart to clearly explain the trend structure and left/right side trading in one go. Trend Structure (The attached image is of a “downtrend”) Uptrend: Composed of consecutive Higher Highs (HH) and Higher Lows (HL) Downtrend: Composed of consecutive Lower Highs (LH) and Lower Lows (LL) Taking the downtrend as an example, if at a certain moment the Lower High is broken, it will produce a “higher high point,” which is the Higher High (HH). At this time, although the trend reversal cannot be confirmed, this is a necessary process in the reversal process. I would like to quote the 123 rule mentioned in Victor Sperandeo's book, “Principles of Professional Speculation.” Taking the downtrend as an example (the uptrend is the opposite), in the 123 rule: 1: Create a higher high (HH) 2: The pullback does not break the previous low (Lower Low) 3: Breakthrough the HH created when “1” occurs When 1, 2, and 3 are completed in order, the trend reversal is established. Left Side and Right Side Along with the diagram, I will introduce several entry scenarios: 1⃣ Purple Area: Assume a potential Stop Hunt signal appears, then enter the market at the far left 2⃣ Gray Area: Has not yet created a Higher High (the 1 of the 123 rule), but a small level pullback to the Stop Hunt area, second left side 3⃣ Yellow 1: The “1” of the 123 rule 4⃣ Yellow 2: The “2” of the 123 rule, second right side 5⃣ Yellow 3: The “3” of the 123 rule, far right The above is just a case; the concept I wish to express is: “The more confirmation signals there are when entering the market, the more it represents the right side; and vice versa.” Summary Of course, the above is just one way of defining it. There are many different ways to distinguish in the market, such as using MA, EMA… and other moving averages to distinguish left and right sides; or using MACD being above or below the zero axis to distinguish left and right sides. But regardless, as long as the trading system itself can be self-consistent and logical, and the expected value is positive, it is a usable system. As for which is better between the left side and the right side, there is no standard answer; each different entry method has its strengths and weaknesses. For instance, when the price is very strong, it is very likely that when the 1 of the 123 rule appears, there will be a continuous and fierce rise, causing 2 and 3 to not appear at all; but if one enters the market at 1 every time, it may also bear more uncertainty. This is the content of the Trading Concept Supplement (Eight). I hope it is helpful to everyone, and I appreciate you reading this far. Original Link: Related Reports Understanding the 6 Current Situations in the Web3 AI Track: Compared to AI Agents, Institutions Focus More on Infrastructure AI Agents Merging with Web3, Are Bots Coming to Help You with On-Chain Financial Management? Complete Introduction to Mind Network: Using FHE Technology to Solve AI Agent Security Challenges <Trading Concept Supplement (Eight): Understanding Trend Structure & Left and Right Side Trading> This article was first published in BlockTempo: The Most Influential Blockchain News Media.