Almost all traders are well-versed with two basic trading strategies – directional and non-directional. Directional trading, which is quite popular, is all about predicting beforehand if the market will go up on down. On the other hand, a non-directional trading strategy revolves around volatility levels and how long a particular option would remain valid.
There is, however, one more trading method that cannot be overlooked. It is called “unidirectional trade strategy”. Unidirectional trading is ideal for traders who want to avoid complex trading techniques and boost their trading gains. This article contains key information you must know as a trader regarding unidirectional trading.
Introduction to Unidirectional Trade Strategy
Focusing on one side of the market (buy or sell), a unidirectional trade strategy is typically used for currency exchange investments. A fundamental example of unidirectional trading is buying of stocks for the long term. Similarly, selling stocks in the bear market is another recession strategy that falls under the umbrella of unidirectional trading.
Why choose a Unidirectional Trade strategy?
Filtering out bad trades is one of the biggest factors that makes Undirectional Trading strategy a very useful one. Even though the market continuously moves up and down, in the bigger picture it follows a specific trend. A wise approach is to follow a single prevailing trend. That is where a unidirectional strategy comes in really handy.
Implementation-wise, unidirectional trade strategy is quite straightforward. That is another reason why it is considered to be a great method for traders. It also allows you to concentrate on the market better, with only one direction to focus on. Furthermore, unidirectional trade strategy helps you make more prudent decisions rather than impulsive ones.
Another noteworthy benefit of this strategy is that your profit potential is likely to be much higher on days when strong trading is witnessed. As Unidirectional Trading helps you trade along with the momentum, your risks are significantly reduced and there’s a major boost in your risk-reward ratio.
Implementing the Undirectional Trade Strategy
The following steps outline the correct way of implementing the Undirectional Trade Strategy,
Opt for the appropriate market and ideal trading time.
Guessing the marketing is more difficult. Therefore, keep buying restricted to occasions when the market price trades above the opening price.
Consider the first green candle over the opening price as your queue to buy.
For setting your profit target, use the Average True Range (ATR) indicator and multiply it by 2.
If you're relatively new to the world of trading, the Unidirectional Trade Strategy is a simple and convenient method of getting a feel of the business. As this strategy doesn't require you to predict the market, it recommended for traders focusing on short-term buying.
Experts recommend that reacting to the market price is a better option than forecasting because the latter often makes you overlook the way the market is actually shaping up. To learn the art of making simple and profitable investments, become a part of the Rich Picks Daily trading community today by visiting https://www.richpicksdaily.com/plans-pricing.