Directional Trading

A fairly straightforward investment strategy that involves buying securities one believes will rise in price and selling those one believes will decline in price. The success of the strategy involves the ability to accurately predict market movements, and the largest risk is the possibility that the investor may make a mistake. Many long-term investors use a directional trading strategy. See also: Market timer, Market neutral trading strategy.

References in periodicals archive ?

Inline Warrants will complement HKEXs existing structured products suite that already includes Derivative Warrants and Callable Bull/Bear Contracts (CBBCs), which are both more focused on directional trading. Like Derivative Warrants, Inline Warrants may be bought and sold prior to their expiry on HKEX.

Hong Kong : Launch of Inline Warrants on Hkex

1 July 2014 - A new survey from Switzerland-based financial services firm Credit Suisse (NYSE: CS) indicates that a rising number of investors expect to be overweight commodities a year from now, with fundamentally based directional trading remaining the best way to maximise returns.

According to CS, 53% of respondents said the best opportunity to extract alpha over the next year is in "fundamentally based directional trading." Fifty two percent of participants said their rational for being in commodities was pure alpha, a percentage that's steadily risen during the last three years.

Investors expect to be overweight commodities in a year, says Credit Suisse

They will be taught how to employ multiple trading strategies in the equity futures market including directional trading, relative value trading, and event driven trading.

SGX and UOB Bullion and Futures set up new Professional Traders Development Centre

Swiss banking group UBS AG (NYSE: UBS) (ZHR: UBSN) (UBSN.VX) has strengthened its macro directional trading team in London with the appointment of Andrew Quessy from Deutsche Bank AG (NYSE: DB) (DBK.DE), Dow Jones has reported, citing a person familiar with the matter.

-UBS strengthens macro directional trading team

Thus when governments get involved in directional trading there is the very real and serious risk that the individuals in charge of trading engage in inappropriate risk taking.

Government debt management

Investors use short sales for directional trading or hedging purposes.

Belgium : ESMA study shows impact of short-selling disclosure on investor behaviour