Futures strategies: the eight ways to express a directional view

Futures carry no premium, no theta and no vega — just leverage and linear exposure. What differentiates one futures strategy from another is not the instrument but the *entry logic*: what market condition it assumes, and what condition destroys it.

What are futures & directional strategies? Futures trading strategies are rule-based approaches to entering and exiting a linear, leveraged position. Trend following, breakout, pullback, mean reversion, momentum, range trading, gap trading and pair trading are the eight canonical families, each profitable in the market regime it assumes and loss-making in the regime it does not.

Trend Following

Direction-agnostic

Trend Following is a futures approach that assumes returns are autocorrelated — that a move already underway is more likely to continue than to rever…

Long or short NIFTY futures held in the direction of the prevailing move Undefined →

Breakout Trading

Direction-agnostic

Breakout Trading is a futures approach that assumes volatility clusters — that a period of contraction is followed by expansion — so it takes a posit…

Long or short NIFTY futures taken as price clears a defined level after a period of contraction Undefined →

Pullback Trading

Direction-agnostic

Pullback Trading is a futures approach that assumes an established trend persists through a temporary counter-move, so it enters in the trend's direc…

Long or short NIFTY futures entered on a counter-move within an established trend Undefined →

Mean Reversion

Neutral

Mean Reversion is a futures approach that assumes returns are negatively autocorrelated — that a market stretched away from its average tends to snap…

Long or short NIFTY futures taken against a stretch away from an average, betting on a return Undefined →

Momentum Trading

Direction-agnostic

Momentum Trading is a futures approach that buys instruments with strong recent returns and often shorts weak ones, betting that relative performance…

Long the strongest and/or short the weakest instruments ranked by recent relative return Undefined →

Range Trading

Neutral

Range Trading is a futures approach that assumes a market stays within an identified band, so it buys near the floor and sells near the ceiling — win…

Sell near the top of an identified band and buy near the bottom, betting the band holds Undefined →

Gap Trading

Volatile

Gap Trading is a futures approach that positions around an opening gap, betting either that price fills back toward the prior close or continues in t…

Long or short NIFTY futures taken around an opening gap, betting it fills or continues Undefined →

Pair Trading

Neutral

Pair Trading is a futures approach that goes long one instrument and short a correlated other, aiming to profit from the spread between them revertin…

Long one instrument and short a correlated other, betting the spread between them mean-reverts Undefined →

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Frequently asked questions

What are futures & directional strategies?

Futures trading strategies are rule-based approaches to entering and exiting a linear, leveraged position. Trend following, breakout, pullback, mean reversion, momentum, range trading, gap trading and pair trading are the eight canonical families, each profitable in the market regime it assumes and loss-making in the regime it does not.

How many futures & directional strategies are there?

StrategyGyan documents 8 futures & directional strategies in full, each with a payoff diagram, its Greeks, its maximum profit and loss stated as a formula and as a worked number, and both NIFTY and BANKNIFTY examples.

Which of these has defined risk?

None carry a structurally capped maximum loss. Trend Following, Breakout Trading, Pullback Trading, Mean Reversion, Momentum Trading, Range Trading, Gap Trading, Pair Trading do not — their loss is bounded only by how far the underlying can move.