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To be honest with you, I didn't know what a Contract For Difference CFD was. It is much like a Futures Contract that never expires. It is traded OTC between the trader and a market maker. The initial margin is between 0.5%-30%. The tax effects are different from owning shares. More markets...

I am not a big fan of using options when pair trading. Aside from the fact that it isn't a hedge unless both sides are deep in the money. My main issue is the cost of the time horizon. Consider the following stock example, SAP/IBM in 2010: We see these dislocations being resolved in a 1...

Various product and websites recommend different position sizing when pair trading. I would like to do an analysis of different position sizing methods when pair trading. Does anyone have a pair trading history they would like to share? (I know I could type it in from this Journal, but a...

Looking at the chart: I see IBM has been trending higher. SAP, starting 10/27 has been trending lower. In at least recent memory, the two stocks track well. Their displacements have resolved in 2-3 months. The current displacement shows no signs of abating. I am not a fan of trading...

I have seen people post about position sizing in terms of small cap/large cap, dollar sizing, beta-weighting, and standard deviation weighting. I would like to weight-in as a standard deviation weigher. Everyone understands that trading an equal number of shares between a small cap and a...