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It depends on your metric and time frame. My first exposure to pairs trading was 20+ yrs ago when I came across the strategy of buying Value Line ranked #1 stocks and shorting the #5's. That would make sense for "investing" per se. For short term trading, one would want overvalued versus...

Money/position mangement is a good way to describe it. If I may, it's like a football team where you substitute players whenever possible. The more the merrier. I won't pretend that getting the bias right is a given. At times, I correctly sense the swing but it's short lived and I have to...

If something works for you, it's good. If it doesn't, it's bad. What's good for you may not be what's good for me. There's no correct answer. Kudos to the flamer who posted before me :)

I've gotta say, this concisely sums up my experience in finding an edge... and it took me nearly 5 years to find it.

I think that you're parsing the concept a bit but I won't argue the point. Of course you need the underlyings to move so I suppose that's directional. But you'd be surprised at how much a pair can sometimes percolate intraday as the spread b/t the two underlyings narrows and widens, enabling...

Actually, rising two horses is far easier than riding one horse. With one horse, it's purely directional. You're right or you're wrong. With two, if you have your correlation down, both moving up or both moving down is a non event. It's the disaprate rates that matter. In a sense, it's like...

Yep, the correlation is essential. Without it, you're depending on randomness which can be hit or miss. As mentioned previously, it's on stocks. When there's fear in the market, stocks fall at different rates due to panicked sellers. For this reason, it works far, far better in a down...

I have no clue about the future so I do over/under valued pairs trading on illiquid stocks (realtively moderate potential loss since one side hedges the other). I suppose it's a reversion to the mean concept. The idea is to try to capture some of the spread b/t the two. Where it gets...

This aptly describes the daily discussions ET :)

For me it was testing my ideas on historical data. Then it was dipping my toe in with several 400-600 share positions. As profits accrued, I increased the size slowly. When some things didn't work, I tried to figure out why... or at least what could I have done to manage the risk better. I...

Geez, you sure are in need of therapy :) I had a friend/mentor in the 80's who had worn a number of financial hats, one of which had been running a mutual fund. At one of our happy hour adventures, I laid out my best but confused hypothesis for gold (whose stocks I was actively trading at...

Emotionally, it's a very hard thing to do but one should buy the market when one feels absotetely the worst about it.

Month after month there are endless debates/arguments here about what does and doesn't work. Math versus economics, TA versus FA, ad nauseum. Who's right? No one. The only thing that matters is if you can find something that works for you. You can spend years reading, learning, chasing...

That's an absolutely SHOCKING revelation! Next thing ya know, they be saying that Pin Risk is a lock! :)

WC is now pressing out vanity license plates under Federal supervision. The problem is, he's stupid and can't spell. I don't think there's much of a market for WADE CROOK license plates. :)

How in the world would you have any clue as to who here makes or loses what?

Was he successful in the market or did he rack up huge fees from pumping seminars based on fraudulent claims ? :confused:

------------------------------------------------------------------------ Quote from heypa: Hey all you sophisticated complicated macho guys. IT ain't hard. When you dance with the market SHE ALWAYS LEADS! It ain't complicated you just have to follow and forget about leading...

It's better to be successful than smart :)

You can get a 6% or so yield from utility preferred stocks. You have to be cognizant of the interest rate cycle as well as stepping aside when the market is melting down in which case, they're quite tradeable. 6% isn't a fortune but most are issued at $25 and you'll eventually get that at...