Charts of Note

Quote from badvestor:

Don't want to pollute the OP's thread, but I don't understand this trade. Is this a theoretical exercise, if real money It appears you have net loss after commissions.
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NP. From the point of accumulation to the end plots, considering the blue line (HST) is Long and the white Line HST is Short when looking at the terminus of the plots it looks like a net gain as the Long gained more than short lost (considering both legs had same dollar amount attributed to them or "dollar neutral). Good to have the blue superior or more elevated than the white on the chart at the end of the day.

Let's say there was $ 13, 500 in play. A 2% gain is $ 265. Annualized to take into consideration for time in the trade (approximately 5 days, because shares were accumulated into the trade by legging in), the return is close to 146%.

270/13,500 = 2%

365/5 = 73

2% x 73 = 146%

Does not matter if real dollars were used or a paper trade, the math is the same.
 
Adjust for commissions, yes, the result would be less and of a degree according to what one's rate is. I am at MB Trading and grandfathered in since it last adjusted the rate/s (different plans). I pay $ 1 per 100 shares for first 500 shares and 50 cents per 100 shares after 500 shares.

This good rate influences me in a manner that allows me to trade more lower priced shares than I otherwise would be reasonably allowed.

HOT has a 57 handle and HST a $ 16 one. You can do the math for round trip commissions to adjust the gross annualized return for yourself.

btw..........At closing today, this may be a position for some OR a closing out to be flat for others, or a legging out for others, or purely as an observation for others not trading. I did not state my status at the close of today's session. In the first round trip trade starting Aug 1 and closing out in the third week of August, I was explicit on my status. It was the first chart I posted on this thread. Subsequently, I have come to respect the purpose of this thread: Charts of Note. The thread was not conceptualized as a journal; I will no longer state my status. The focus should not be on a trader, but on the chart. I picked HOT and HST as a pair because it was ripe for a pair trade and another.

Pair trading is generally characterized as high probability of number of trades with booked gains in relation to all trades made, and with more frequency of trading than many other styles of trading. The dollar amount of gain from each trade is not sexy. But it has the potential for being frequently achieved than other styles of trading. For me, the ideal strategy is keeping as much as my capital in play over many numbers of trades simultaneously as is prudent.
 
This pair is noteworthy for its three years of chart examinations. I would highly recommend it for examination, too. For different style pairs traders, it can mean different things for their respective use of capital. My personal approach would be to make it a full first layer opening of trade with no legging in. I would be ready at the session open Monday and look for an opportunistic moment to put it on. Should it open dramatically adversely before the execution of an entry, I may wish to watch for a favorable entry, keeping my powder dry and waiting patiently for that more fortuitous occasion.

NOTE: Nothing said in text or chart annotations takes into consideration scheduled earnings reports or ex-dividend dates, news (past or prospectively), or fundamentals.

<img src=http://www.elitetrader.com/vb/attachment.php?s=&postid=3621503>
 

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This pair is noteworthy for its 3 Year and shorter terms of chart examinations. I would highly recommend it for examination, too. For different style pairs traders, it can mean different things for their
respective use of capital. I posted the 3 year chart because it points to the greatest risk; the current rubber band stretch can be stretched farther. The shorter terms look good with the exception that this would have been better started as a trade Friday. But a one day move is a blip, and if I were prepared to maintain it for my average time of holding, and possibly put on layers, I like this for my trade.

NOTE: Nothing said in text or chart annotations takes into consideration scheduled earnings reports or ex-dividend dates, news (past or prospectively), or fundamentals.

<img src=http://www.elitetrader.com/vb/attachment.php?s=&postid=3621535>
 

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Quote from deucy28:

This pair is noteworthy for its three years of chart examinations. I would highly recommend it for examination, too. For different style pairs traders, it can mean different things for their respective use of capital. My personal approach would be to make it a full first layer opening of trade with no legging in. I would be ready at the session open Monday and look for an opportunistic moment to put it on. Should it open dramatically adversely before the execution of an entry, I may wish to watch for a favorable entry, keeping my powder dry and waiting patiently for that more fortuitous occasion.

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I entered with my standard number of shares for a first level position in each (no legging in)

2 hours and 10 minutes after session opening
HON short
BA long

2 hours and 15 minutes after session opening
CI short
AET long

Cumulatively, after an initial pop in gains, I ended the day down as much as I had ever saw gains for the day. From genius to humility. But pairs trading for me is position, swing trading and not day trading (with some exceptions). So exacting entries are not very important.

The Short HOT and Long HST is standing quite tall in progress since Aug 1 post.

But I digress. As I posted very recently, I intend not post my status on this thread with respect to any charted pairs. Evolution of pairs illustrated on this thread will be commented on elsewhere. My digression just now is in violation of that, I know.

FWIW on-going commentary will be exclusively on the Journals forum / Pair Trading Strategy Jnl. thread. So, Charts of Note here; commentary there.
 
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Not healthy...

Via http://www.mercenarytrader.com/2012/09/coppers-message/
 
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