PTF sent out a freebie this morning for AYE/GXP. I took it as I do trade pairs now and again and am looking to do more of them. The trade is up nicely so far as AYE is recovering from a beatdown and GXP is doing its usual shuffle around the $15 area. My question is this: Even though I took this trade and its working, I was ready to discard it because of the recent price action of AYE. Those of you with more experience on this thread, you do see that this is not a normal divergence, no? This seems to be a spread that went way out of whack only because one of the stocks got destroyed. In general, am I correct to be shy of these types of pair setups?
I tentatively opened an account with IB a few weeks ago but havent yet funded it. Perhaps I'll do that. They seem fairly popular and have a well established API which I like.
From IB WebSite: "An account must have at least USD 100,000 (or USD equivalent) in Net Liquidation Value to be eligible for a Portfolio Margin account" With less than 100k i think you have to open a cash account, where you does not have the option to use margin, when trading stocks. There are plenty of IB users on this forum, correct me if I am wrong, plz
What IB calls portfolio margin is the ability to have additional margin, up to 6x. With amounts less than $100,000 you can have regular RegT margin of 2x overnight or 4x intraday. In addition, IB's UI is well suited to pair trading, although you can't place a limit order for pairs (yet). Last, IB treats pair trading very favorably, essentially requiring margin for only the long side, unlike TS where magin requirements are a lot higher. Sorry for the commercial, but I'm a big fan
A reg T margin account and portfolio margin are 2 different things. Portfolio margin provides more than the standard magin. This gives better capitalized traders more leverage. You should be able to open a reg T margin account with much less than what is require for porfolio margin. This is my understanding, I do not trade through IB. I am not sure what leverage you can receive via portfolio margin but it should be a good bit more than the old reg T standard.
Hey Jonny, just wondering whether you are still running MET/PRU ? Im still in this trade and im half-minded to exit at a loss.
had previous good results with the pairs but been out of it for a wee while after evaporating a lot of profits last May. this post has inspired me to get back into it am getting into positions with the thought that if they go against me, i will add a couple of layers to them up to the stop. Long MCD short YUM long CVX short XOM long APC - short OXY anywhere under -5 with a 1.3:1 ratio long T - short VZ long HCN - short HCP and a few others. just wanted to see if anyone has any ideas about these as i didn't see them in the 10 or so pages of posts i looked through nor have i been able to succesfully download the PTF. Thanks so much for any words.