Good Pairs

I have been trading PSFT and VRTS as a pair for several months with a lot of success. Given the move PSFT made last night (luckily, I was on the right side for once), I am thinking I may have to look for a pair to replace this one. Any suggestions?

 

I suggest you replace it with something that corrolates highly with what ever you are replacing.

 

whats a pair?

 

Replace it with SEBL.

nitro

 

You may want to look at http://www.market-topology.com

nitro

 

For the ultra conservative, buy DIA against short of QQQ.

QQQ is more volatile so use a multiple of 1.6 DIA for every QQQ.

Works well in the current cyclical environment.

 

Can anyone offer some basic entry and exit rules for a pair trading system? Like what makes a good situation to put on a hedge?

 

Thanks for the help, I really appreciate it.


Disciplined,

I am interested in the DIA/QQQ pair, in fact I have considered it in the past. When you say 1.6QQQ for each DIA, do you mean dollar value, or shares?


Hitman,

I sent you a PM.


AnonTrader,

If you do a search for pairs, you will find some threads. Basically, it is trading the spread between two stocks. It doesn't matter if they go up or down, just if they get closer or farther apart in price.

 

What's the advantage over trading the two stocks outright? Better fills? Better profits?

 

Dollar value - ie. $40k in QQQ, $64k in DIA. Used it today, with the idea that the Dow would recover more than Nasdaq, but if the market kept tanking the Nasdaq would be the lead weight. You'd profit in both circumstances, which seemed likely today, which is why I implented it. Worked just as planned intraday. Dont like this as much overnite because the Nasdaq is whiplashing everyone lately.