Any Pairs Traders Here?

Discussion in 'Trading' started by Sysdomatic1, Aug 30, 2002.

  1. Avaturk

    Avaturk

    Trade them every week. I use "swing" trade time/profit objectives and will hold up to a loss limit or 10 days. Typical holding period is 2-3 days. Scale in with 50%, and will add once more depending on the volatility of the pair.

    Some things I have learned/points to consider:

    -Better to use high correlation pairs in the beginning, preferably ETFs (QQQ,SMH)-slow, but no news blowouts and can trade short without uptick rule.
    -Rank securites by sector- only the largest market cap/most liquid; set up ratio/spread charts.
    -This took me a while to "get", but it has been the key to my trading: use a volatility factor in your analysis that captures trend changes in HV/IV.
    -If possible, use securities with similar betas/daily fluctuation percentages.
    -Just like directional trading, look for confirmation in multiple time-frames.
    -Diversify across sectors
    -When you have more capital, trade "groups" against each other-lowers risk and helps protect against single stock news blowouts.

    I use an EMA standard deviation system and this method of trading as done well over the last six months. Of course, the next six may be completly different. Succesful trading is very hard work and flexibility is a key to making it.

    Hope this helps someone. Good trading.
     
    #21     Aug 31, 2002