Ssf
- Thread starter Eldredge
- Start date
Gonna give it a lookBack to where you started, with SSF as a substitute for selling short, the first leg could be the SSF, and for the second you could get your immediate fill buying the stock of the other company.
Supposedly there is or soon will be on IB the ability to place Bracket orders where the order for one product is triggered by the price of any other product. You could base the buy stock order trigger on the sell SFF order price. The thin trading of SSF could actually be to your advantage in this, since it would mean near certainty that the SSF trigger price was from the execution of your own SSF order.
"You can set up a conditional order - however it has not been officially announced in our release notes as it is still being tweaked.
Set-up the order, right click the order and select "Make Conditional"
It works on the Demo. I made market orders on MSFT, conditional on price of IBM, then executed IBM orders at that price, and the MSFT market orders went through immediately, but not before the IBM order.
Or maybe Basket order could do the same thing even simpler, making the second order conditional on the first order getting executed. I have to learn about these advanced orders now.
I also have to learn about the Pairs Trading strategy.
I also have to learn about the Pairs Trading strategy.
Again, I know essentially nothing about Pairs Trading and need to learn a lot. But here's a thought, tell me if it may be worth considering:
If you took two neutral positions in two different stocks, for instance buying February NVSL & selling March NVLS, while buying March AMAT & selling February AMAT, you would have two different pairs trades set up on NVLS and AMAT, and your margin would be 40:1 until you closed out one pair, because the two AMAT would offset each other, and the two NVLS positions would offset each other.
So that, while you had both sets of pairs open, your margin would be 1/4 for the two pairs what it would be for one pair, and also you wouldn't have to fret about which stock should be the short leg and which should be the long leg, since you would have created both arrangements.
For the same price (except commissions) as entering a pairs trade of 1 NVLS contract & 1 AMAT contract, you could have one pairs trade of 4 NVLS & 4 AMAT, plus the reverse pairs trade of 4 more AMAT & 4 NVLS.
If you took two neutral positions in two different stocks, for instance buying February NVSL & selling March NVLS, while buying March AMAT & selling February AMAT, you would have two different pairs trades set up on NVLS and AMAT, and your margin would be 40:1 until you closed out one pair, because the two AMAT would offset each other, and the two NVLS positions would offset each other.
So that, while you had both sets of pairs open, your margin would be 1/4 for the two pairs what it would be for one pair, and also you wouldn't have to fret about which stock should be the short leg and which should be the long leg, since you would have created both arrangements.
For the same price (except commissions) as entering a pairs trade of 1 NVLS contract & 1 AMAT contract, you could have one pairs trade of 4 NVLS & 4 AMAT, plus the reverse pairs trade of 4 more AMAT & 4 NVLS.
I just want to caution you that having an extremely leveraged position that you have to leg into with IB can be quite difficult to unwind. Whenever you have two positions that offset each other(ie long frontmonth, short backmonth) and you are margined to the max you will only be exit a few contracts at a time. Thats because you can't unwind too much of one position without increasing your margin limit beyond the max. That could be a factor if you need to exit in a hurry.
Yes, thanks. My point though, is that if 1 contract + 1 contract is within your means, then the double pairs trade would allow you to trade 1+1 plus the other 1+1, and your margin would never be more than simply 1+1, and in the first half of the method your margin would be reduced from the normal cost of 1+1 to the cost of ¼+¼. Then when you closed one of the pairs, you would be back to your original 1+1. 
Although this method might seem like it gets you nowhere, what it may do is allow you to create a pairs trade, without having to decide which leg should be short or long, and only in the course of events when you saw which pair had profited, you could close that trade, then wait for the other to close back again. It might take you twice as long to profit from it, but it would remove the need to decide which way to bet the pair in the beginning. Plus, in the first half of this method, you would still have 75% of the normal margin room in your account for trading something completely different.
Although this method might seem like it gets you nowhere, what it may do is allow you to create a pairs trade, without having to decide which leg should be short or long, and only in the course of events when you saw which pair had profited, you could close that trade, then wait for the other to close back again. It might take you twice as long to profit from it, but it would remove the need to decide which way to bet the pair in the beginning. Plus, in the first half of this method, you would still have 75% of the normal margin room in your account for trading something completely different.