Unidirectional Trading Strategy (UDTS) is the simplest and smartest stock trading technique. In this article, you’ll learn the theoretical and practical knowledge of the best way to do intraday trading based on the Unidirectional trading strategy or UDTS. Unidirectional trading strategies are collections of trading strategies that rely on technical analysis and help the trader to navigate through the market comfortably.
By the end of this article, you will understand how to utilize one-way trading strategies that allow you to focus merely on one side of the market. Thus, with this strategy, you can concentrate either on the uptrend or the downtrend. The first thing you need to do if you want to use the unidirectional trading strategy is to focus on the overview of one direction of the market to identify one-way trading movements. You will also learn how to spot a unidirectional intraday trading movement in an easy turn.
The majority of traders are only familiar with the concepts of directional and non-directional trading. Directional trading is perhaps one of the most frequently utilized trading strategies for buying and selling securities including stocks, bonds, commodities, currencies, and crypto coins. Direction trading involves engaging in betting to determine the direction of the market and whether it will show upward or downward movement.
On the other hand, the non-directional trading strategy does not necessitate the prediction of the market direction. Nonetheless, directionless trading depends on the overall level of volatility and the option’s expiration date.
Non-directional trading commonly involves the use of option contracts, but can also be implemented in a limited range of markets with the so-called pair trading strategy. One simple example of an omnidirectional trading strategy is the straddle option strategy. However, in this article, we are going to discuss the third type of trading strategy known as the Unidirectional trading strategy.
To get the advantage of increasing your trading profit without paying too much attention to complex trading methods, the unidirectional trading model is the best trading approach for you.
We’ll begin this article by providing an overview of the unidirectional trading strategy. You will learn how to use the strategy, how it works, and some of the benefits of the strategy that may be useful.
What is a Unidirectional Trading Strategy?
Unidirectional trading is a currency exchange investment strategy that operates in a single direction be it long (buy) or short (sell). The main idea behind the unidirectional trade model is to get you focused only on one side of the market.
For example, the buy and hold investment strategy is a type of unidirectional trading strategy that is applied by only buying stocks for the long term.
First and foremost unidirectional trading is a unique way to filter out bad trades. Everyone wants to have a trading edge, but when you try to be all over the place by buying stocks and then selling stocks from other sectors, it can be quite stressful. Here’s a guide on how to get that trading edge.
The market moves up and down all the time, but in the grand scheme, they will follow a major directional bias or trend. A real problem; traders have is that they try to capture both up and downswings in the price, which can be a costly approach.
The sensible way of trading is to pick one direction, preferably the direction of the major trend, and only stick to that side of the market. You can achieve this by understanding the direction indicator formula.
Here are 3 other major advantages of the unidirectional trading strategy:
- An easy to implement a trading strategy.
- An efficient way to keep you focused on the market.
- Better control of your emotions.
Currency exchange strategies are traded in one direction: buy (buy) or sell (sell). The basic idea of a one-way trading model is to focus on only one side of the market.
For example, the buy-and-hold investment strategy is a type of one-way trading strategy that applies only to long-term stock purchases.
First of all, one-way trading is a unique way to filter out bad deals.
Everyone wants a trading edge, but it can be very stressful when trying to buy stocks and sell stocks in other sectors. Here is a guide on how to earn these trading points.
The market is constantly moving up and down, but will generally follow a big trend or trend. Real problem; What traders have is that they are trying to capture price increases, which can be an expensive way.
A smart way to trade is to choose a direction, ideally the direction of the main trend, and stick to that side of the market. Understanding the turn signal formula can help you achieve this.
The three main advantages of a one-way trading strategy are:
- User-friendly trading strategy.
- Effective market focus.
- Manage your emotions better.
The intraday trading strategies offered in this UDTS article is a popular strategy with newbies and traders from every part of the globe. These trading strategies are based on basic candlestick tools and line charts. You can learn how to find profitable market trends by examining supply and demand in candlesticks and line charts.
Engaging in Positional trading strategy for profit maximization or enhancements
A key characteristic of studying positional trading strategies is to maximize profit with minimal effort by using the UDTS. Therefore begin your trading with positional or long positional trading strategies because it is easier to trade positions compared to intraday trading.
Positional trading features large stop-loss orders and large profit targets, whereas the intraday trading strategy features smaller stop loss and minimal profit targets. Newbie traders ought, to begin with, positional trading instead of intraday trading because there is an enormous amount of market pressure when we trade at shorter timeframes because it becomes a huge issue to trade with accuracy.
Therefore, newbie traders should engage in trading either by using a positional trading strategy or long positional trading.
How to trade with a Unidirectional intraday trading strategy
To have a better understanding of the mechanism of unidirectional trading strategy, I will start by explaining the general price action:
Did you ever observe that while doing intraday trading, the price tends to return to the same level a lot of times?
I guess you have experienced one of the following scenarios in the course of your trade:
You choose the suitable purchase level and establish a stop-loss defensive strategy, but the stop loss is activated.
The market is now falling, indicating a bearish trend.
Once more, you choose the right level to sell and put a stop loss protective technique, but the stop gets activated again.
At this point, after the market exits the trade, the price rises above the originally purchased level and continues to follow your primary trade direction.
You find yourself in a complex situation, exhausted and tired, trying to discover what just occurred and why. You don’t need to feel ashamed to admit that you’ve been through one of these trading situations. The majority of traders have made these trading mistakes at some point in their trading careers.
The ethics of the story is that your primary trading idea will be effective if:
You use a larger stop loss.
Or, if you once more make a long-term position trade at a better price than the first time you placed the trade.
At this time …
You do not randomly place a purchase order. We have assumed that you have a trading method with clear rules that signal to you when to buy or sell.
Below is the problem:
The use of a broader stop loss can result in large losses and can be very expensive for our profit goals. An alternate trading option is to engage in a unidirectional intraday trading strategy, which allows you to trade in a single direction.
I hope you can discover that it takes an easy-to-understand and user-friendly process.
Below we’ll give you an overview of unidirectional trading strategies and an opportunity to read some of the trading rules that can be the basis for engaging in such trades.
Unidirectional Trade Strategy Review
From the very beginning, we want to clarify that a one-sided trading strategy is an authentic trading technique. If you want to learn the basics of one-way trading, we have covered it.
We thought about it and put a lot of effort into more behind-the-scenes testing strategies.
One-way trading strategies do not require a level of prediction of market direction or trends. If you are one of those traders who don’t always understand how to set direction, this trading strategy is for you.
Now you can think.
“How do you make money on the market without predicting future price movements?”
This is a good question.
Here’s how to make money without predicting the market.
The wisdom of trading, learned from professional traders, is not to predict the future, but to react and trade to what is happening right now.
Unidirectional Trade Strategy
The first step to get started is choosing the right market for trading and the best time to trade.
You choose the market and hold on to it until you master it.
If you are a stock trader, how to choose a stock for weekly trading: This is the step of choosing stock for weekly trading.
We will stick with trading EUR/USD to review our one-way trading strategy.
In the future, we will set up some rules for trading in only one direction.
Forecasting and Reacting to Forecast
When trying to predict where the market will go, it can be costly if the forecast goes wrong and real money is at stake. It’s also not as simple as predicting future trends as there are so many factors that can change market development.
When the market speed increases, professional traders respond to this information and trade only on the buyer side because it’s a place to make all “simple” money.
The philosophy of one-way trading is to sacrifice certain potential profits to increase your chances of being on your side. Analyzing the risk as a reward, you can see the advantages of responding to the market price of the book value.
Let’s take a step-by-step look at how one-way trading can help you focus on the “right side of the market”.
If the subsequent key trading session opens (e.g. London session), we’re looking for the first bullish candle indicator to close beyond the open price to activate an entry position.
Below is the equivalent EUR/USD chart made bigger:
You can purchase whenever the price returns and breaks off from the open market price.
We’ll apply equivalent rules to purchase at the primary bullish candle that closes beyond the daily opening market price.
View the sample in the EUR/USD chart below.
At this stage, you can ask yourself.
“What will you do if the market trends beyond the open price?”
“How did you get there?”
Purchase after another straight bullish candlestick. Or, when you see a candle that shows a large bullish movement with a trading range that is larger than the adjoining candles, you can proceed with a buy order.
Review the FX chart below:
Observe that this trade deal didn’t yield the desired result. However, we have to follow the rules because, in the end, all the minor profits you make will build up. Unidirectional Trading Strategy (Spending Price Tricks)
Take Profit is equivalent to 2 multiplied by the ATR
It uses an average true range (ATR) metric for estimating the volatility of the price. This allows you to more efficiently determine the dynamic exit price level.
We’ll utilize the 14-period ATR and apply it to the 5-minute chart and multiply it by two to get our revenue target.
For instance, if the ATR shows 5 pips, the take profit level will be positioned at 2 x ATR or 10 pips.
You can see the sample in the following chart:
Below are a few of the benefits of engaging in a unidirectional trading strategy:
- It allows you to trade following the market momentum.
- Great profit potential on strong trading days.
- Minimizes risk and enhances your risk to reward ratios.
So, a unidirectional trading strategy is a great trading strategy that makes it easy for newbies to step into the market using its user-friendly trading approach. The unidirectional trading strategy is more profitable for short-term traders because they don’t need to predict the market to earn profits. All they need to do is implement proper risk management.
The truth is that if you stay agile and engage in the present market price in a lively manner, you find yourself in a better trading situation than when you make efforts to make market predictions. When you’re stuck with your market forecasts, you don’t know what’s going on in the market.
Go with a simple trading strategy by choosing the unidirectional trading strategy!