Been researching pairs trading for months now, looks fairly promising. I've read through every post on this board relating to pairs trading; I'm just wondering, are there any active pairs traders here? If you are trading say, 100,000 in capital, how much of that would you put into one pair trade? What kind of daily/weekly % returns are you reaping after commissions? Thanks for any feedback, I'll post some of the results of my research here as well if anyone wants to see it.
Any Pairs Traders Here?
- Thread starter Sysdomatic1
- Start date
Word to the wise.
Diversify.
Be careful with one pair, I have a buddy who does great with pairs, taken some hits lately though.
His big rule is to diversify among several different pairs in different sectors.
Diversify.
Be careful with one pair, I have a buddy who does great with pairs, taken some hits lately though.
His big rule is to diversify among several different pairs in different sectors.
Ok, pair trader?
Before you do any pair trades, you should have a historical correlation and blowout range. I don't believe that ERTS is correlated to MSFT more than it is to the NDQ.
Remember, there is market correlation and stock correlation. just because two stocks have the same market correlation doesn't necessarily make them a good pair.
Try the less volatile stuff (mostly NYSE industrial pairs) first to get used to legging in and taking a little heat. That is all for now.
Remember, there is market correlation and stock correlation. just because two stocks have the same market correlation doesn't necessarily make them a good pair.
Try the less volatile stuff (mostly NYSE industrial pairs) first to get used to legging in and taking a little heat. That is all for now.
Any websites other than market-topology that give research on pairs?
I've traded pairs every day for one year now...a few rules may be helpful:
- distribute equal capital on both sides of the pair (set up a spread chart using the same ratio)
- start with efficient pairs or preferably mergers to get used to this style of trading. ie, a merger like P/COC or PFE/PHA will give you experience with some "safety" (mergers do have blow-up risk) as opposed to trading a trending pair like KO/PEP.
- I don't take any trades overnight...too much news risk, etc.
- watch out for earnings season...insider trading causes pairs to trend.
- distribute capital at one or two levels ...use profit targets and stop losses.
- if trading nyse, use fishing orders (see my post in the "being on the same side as the specialist" thread).
Too much else to say in this post. If you trade at Bright, PM me...our office has training for pairs.
Darryl
-------I have a buddy who does great with pairs, taken some hits lately though.
that because trends start shows up. 6 month ago -nothing and now-for stocks with regular crossover in 1-2 days -trends for 5-7 days or even more........... talking about SOX stocks . at this point this strategy did not have any difference, because you have to recognize trend on different timeframes and so on........
that because trends start shows up. 6 month ago -nothing and now-for stocks with regular crossover in 1-2 days -trends for 5-7 days or even more........... talking about SOX stocks . at this point this strategy did not have any difference, because you have to recognize trend on different timeframes and so on........