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Directional and non-directional trading strategies are two broad classification of trading strategies. Directional trading strategies include any long-term or short-term trading strategies which include taking a long or short position in market. Non-directional trading strategies include trading strategies which include taking market-neutral positions.

Directional trading strategies are most widely followed trading strategies by both novice and experienced traders and investors; as they are easy to understand, can be used to trade all financial instruments, and need less automation and technical skills. These strategies usually follow some widely accepted trading policies such as taking net long position when market is predicted to go up, taking net short position when market is predicted to fall and using stop limits and other risk minimizing tools. Some common examples of directional trading strategies include trend-following trading strategies, break-out systems, pattern reorganization strategies and moving average crossover based strategies.

Non-directional or Market-Neutral trading strategies are complex strategies with loosely defined trading policies, which involve profiting from upward, downward and sidewise moving markets. These strategies are usually followed by very big traders like hedge-funds and institutional traders with the help of highly sophisticated and complex trading systems. Non-directional trading strategies involve careful matching of trading instruments, extreme money management and position sizing skills, and vast market knowledge. Some common examples include arbitrate strategies, sector/stock matching strategies, pairs trading strategies, etc.

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