----------- I don't take any trades overnight...too much news risk, etc. what you do if trading session about to end and you did not make any profit? what you do if trade turns against you? do you add to your position? thank you!
I get out at a loss...I used to take stuff overnight that closed at against me, but the risk didnt prove to be worth it. Besides, my style of trading pairs right now is more one-sided momentum plays using the other side of the pair as a hedge. If I have a pair on and it turns against me, I'll add one more leg max. Darryl
Very funny Nitro This is a good topic for you. However, I know you don't like to share your "proprietary" strategies! Or as our beloved W would say, "strategery". On a serious note...where's a good place to get correlations now that topology is charging for everything?
Hehe, Seriously, I never used Market-Topolgy - I just get all the stocks in a sector after the market closes and start working. nitro
that was a fast reply.... ok, but don't you want to get stocks that normally have a correlation of .9 or so....and put the pair on when it gets out of line? (might not be able to reply , gotta get to a surprise B-Day party soon). BTW, you suck.
I don't look at stocks that necessarily have to have a .9 correlation - I have used and use some that are MUCH lower that that with success. nitro PS - Thanks, I am trying to suck less everyday...
What kind of time frames do you use? Do you look at how stocks are trading over say, a 5 day period, or something smaller like a one day chart of the two stocks?
If you want to make any type of big money with pairs trading you must be willing to be in positions for an extended period of time. Don't be scared of "overnights"; there is absolutely nothing wrong with them. Either your "pair"/"system" works or it does not.
I understand your post, it is just the fact that the "overnights" have been the problem with news and big losses for some pairs traders. The make money, make money, make money, get blown out on a bad overnight has taken my friend out of the game occasionally. To avoid this unnecessary risk, he gets flat every night, with the small occasional exception, like gold stocks. Disclaimer: I do not trade pairs. So my OPINION ONLY comes from my friend who only trades pairs. I would never say what you do does not work.