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Directional Trade

Directional Trade		A trade that requires the underlying asset to move in one direction in order to produce profits. To make a profit, the trader must determine before placing a directional trade which way the asset will go.
Additional comments: Buying stocks is an example of a directional bet because the stock price must move higher in order to generate profits.

Related Terms
		Speculator An investor or trader who is willing to take large risks for a chance to make large gains. ... Straddle A neutral trade that involves simultaneously buying a call and put at the same strike price and with the same Expiration ... Stop Order A stop order is an order to buy or sell a stock once the price of the stock reaches a specified ...

 

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