Examples of Non Directional Trading Strategies

Due to its usefulness to traders who are facing unpredictability in the financial markets as a result of the recession and economic depression, the popularity of non directional trading strategies is coming about. Otherwise known as neutral strategies, it provides traders lesser risks and higher chances of earning profits during a time when predictability of the financial market is close to impossible. The profit potential is not dependent on the price of the financial tool either going up or down. The focus is on the volatility of the prices of the instruments. It is what they call neutral strategy.

Some of the examples of the non directional trading strategies are the following: the butterfly strategy, which buys out of the money call and at the money as well as sell 2 in the money calls or the other way around; the so-called “guts”, which involves the sell in money “call” and “put”; the “condor” strategy, which involves the selling out of the buy call and the money call at a higher strike price and at the same time buying the “put” with a low strike price while trader sells out of the money “put”; the “straddle” strategy, which takes and holds both call and put positions at a strike price expiration that are the same. Position only becomes money-making to the buyer if the underlying financial instrument has a significant change in its value, whether lower or higher, also involves the long and short straddles; the “strangle” strategy and risk reversals are other examples of this type of strategies. There are more types of non directional trading systems out thee which may differ depending on the market you are using.

Timothy Stevens is a Forex Options Trader who owns http://www.NonDirectionTrading.com – He has helped hundreds of people on Trading Forex with Options.

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