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Pair Trading Strategy Journal
- Thread starter jonnysharp
- Start date
Quote from yobo:
No worries. How can you not be long POT...LOL
I trade it short vs the other ones although sometimes i'll get into some intraday scalps on mospot which i trade both ways...i'm just saying be careful, fertilizer spreads have $30 6 month ranges which can be seen in a week or less...Are you guys capital balancing with ratios or paying attention to the effect of the extra long or short dollars in each pair?
Not sure I understand your question but with all pairs I always capital balance. Equal amounts of dollars on both sides.
For me today, cf/pot is the one pair that is not working in my favor. Took some nice profits in MBT/tii, aapl/goog, and oxy/pxp.
I alos trade mos but have it paired against mon.
For me today, cf/pot is the one pair that is not working in my favor. Took some nice profits in MBT/tii, aapl/goog, and oxy/pxp.
I alos trade mos but have it paired against mon.
Quote from yobo:
Not sure I understand your question but with all pairs I always capital balance. Equal amounts of dollars on both sides.
For me today, cf/pot is the one pair that is not working in my favor. Took some nice profits in MBT/tii, aapl/goog, and oxy/pxp.
I alos trade mos but have it paired against mon.
Yeah that was one of the questions I was asking...i'm not gonna tell you how to trade but trading against fundamentals can be dangerous, CF is the strongest in the group so just be careful shorting it against the more over-valued POT and MOS.
Quote from jonnysharp:
ok point taken GGSAE, how do you access fundamental strength?
yeah most of the trades are working well today yobo.
One Trade today:
Long HON @ 50.36
Short LUK @ 46.45
Open Trades: 11
Any of the free sites like yahoo fiance, msn investing, ect. are good enough...of course if you really want detailed information there's a host of pay services out there. But as long as you can know basic analysis of p/e,p/b,debt/equity. roi, cash on hand, ect you should be able to figure out a fundamental bias.
For pairs it's important regardless whether you're trading contrarian or directionally, because trends get established off news engines and market sentiment of each stock within the sector.
I always trade with fundamental bias, unless the pairs are fundamentally neutral. When the fundamentals kick in, you don't want to be on the wrong side. Fundamentals give you another edge, especially when carrying pairs overnight or swing trading. CF is one of the more undervalued stocks in the sector based on P/E and P/B. To me fundamentals are much more important than technicals when trading pairs simply because we are trading a relationship between two stocks. The greater the fundamental edge and the more similar the company, the more inclined I am to beging building a position in the pair.
I agree, buyouts are oh so painful, not as bad as a merger blowout, but close. I was taught to also try to be long the smaller market cap company, another consideration when choosing a bias.