Why would you pair a weaker stock like KLAC with NVLS ? Why would you pair two stocks in same group, equipment makers ? The 2 strongest stocks in group are NVLS and CCMP. NVLS is up 80% off low, KLAC 58 % and look at the ADX'S of both to compare strenght. NVLS has adx of 42 and KLAC has adx of 24. I would pair NVLS, with MXIM, LLTC QLGC or ICST, VSEA second tier semi manufactures, for better representation of SOX ( all trade over millon shares )
yep..........NVLS and MXIM-LLTC...........go head pair them.......but dont cry later. you may put it this way-if you think, market will go down, then you may short NVLS and long KLAC(only, if NVLS gain more than KLAC during last rally). if you daily chart % difference between them and compare to let say QQQ you will see, what im talking about. and after all-you have to know direction anyway))))))) after all my research and actual trading i did not see any difference between directional and pair trading. only two things make sence- non market directional, and second-you not going to see such swings in price on directional like you wil see, if you trade pair intraday. 3-5% swings in hours,sometimes even minutes.... QQQ is puppy.........
I was entering my positions in such a manner that I could ride out the normal range of the pair I was trading, so I would be in some legs of my position for a long time. I would close the latest portions as they became profitable, and these would offset the losses on the older positions. I would let some profitable legs run, and close out the whole position and reverse when the overall position looked good. Sometimes this would happen a few times in one day, other times it would be weeks before I would reverse the position. This required me to leave a lot of my capital idle at times, and use a lot of margin at other times. The margin change really cost me, because I had to stop adding to and trading my positions in order to prevent a margin call (liquidation). So I have basically been out of business since the margin change. Some of my positions are finally flat, and I think I will be trading again within a few days. Now, I will put on my positions at closer intervals and with a little more size because I won't be letting them run as long. I will close portions of each position before 3:50 to avoid margin problems. I have been paper trading this, and it might actually be more profitable in the long run. Time will tell I guess, but October was by far the worst month I have had - it would have been a decent month if I could have traded normally.