Strategy Types: Directional vs Neutral
Before building any strategy, you must choose your market approach. This single choice shapes how the entire engine evaluates signals, constructs positions, and manages exits.
Directional Mode
Best for: Trend-following, momentum-based, and swing trading strategies.
In Directional mode, the Strategy Builder creates two independent signal branches:
- Buy Signal Branch — Rules that identify bullish conditions to go long.
- Sell Signal Branch — Rules that identify bearish conditions to go short.
Each branch operates independently. When the Buy signal fires, the engine deploys the Buy-side position legs. When the Sell signal fires, it deploys the Sell-side position legs.
When to Use Directional Mode
| Use Case | Example |
|---|---|
| Trend-following strategies | Enter long when EMA crosses above SMA; enter short when it crosses below |
| Momentum plays | Buy when RSI exits oversold; Sell when RSI exits overbought |
| Breakout strategies | Buy above resistance; Sell below support |
You don’t have to define both Buy and Sell branches. If you only trade one direction (e.g., only buying calls on bullish signals), simply configure the Buy branch and leave the Sell branch empty.
Neutral Mode
Best for: Premium-selling, delta-neutral, and range-bound strategies.
In Neutral mode, the engine adapts to let you deploy non-directional setups where market direction is irrelevant. Instead of evaluating Buy vs Sell conditions separately, the strategy focuses on:
- Deploying positions that profit from time decay (Theta)
- Maintaining delta-neutral exposure
- Capitalizing on markets that stay within a range
When to Use Neutral Mode
| Use Case | Example |
|---|---|
| Short Straddle / Short Strangle | Sell ATM Call + ATM Put, profiting from low volatility |
| Iron Condor | Sell inner strikes + buy outer wings for defined risk |
| Calendar Spreads | Exploit differences in time decay across expirations |
Key Differences at a Glance
| Feature | Directional | Neutral |
|---|---|---|
| Signal branches | Separate Buy & Sell | Single unified signal |
| Market bias | Bullish or Bearish | Range-bound / Sideways |
| Typical instruments | Calls OR Puts | Multi-leg spreads (Calls AND Puts) |
| Primary edge | Riding momentum | Collecting premium |
| Risk profile | Unlimited (if unhedged) | Defined (with wings) |
How to Switch
You select the strategy type at the very beginning of the builder. This setting cannot be changed after the strategy is created — if you want to switch from Directional to Neutral, create a new strategy.
Next Steps
Now that you understand the two modes, learn how to configure timeframes for your strategy:
→ Next: Timeframe Configuration