Pair Trading Strategy Journal

Geez, did they take the idea from my chart?

 

Just more risk and more reward if you play in the high vol deals. But you can get slaughtered on one deal if you dont have good money management.

 

Here is my rationality. Why should two random stock, with some sort of divergence flag, follow thru and meet expectations?

Opposed to IBM under performing GE (forgetting about news sensitivity) and using divergance this way because they are linked to the DJIA and once there is a flag for IBM, then IBM should play catch up.

I just see picking two random stocks do not give a trading edge unless they are related by index or industry at the least.

Some people really scorn pair trading while others praise the @#$% out of it but this thread should shine some light hopefully in either case.

 

14

 

not sure, its a good chart to have though.

 

Who said anything about pair trading random stocks? as stated numerous times all throughout this journal we only trade pairs where both stocks are in the same industry.

 

...and have a proven and backtested high correlation.

 

If any one knows then please tell me
about the ration used in Pair trade.
u can hv the data sheet when u run "back tester" and click option "View data"after selecting a pair.
there is a colam of Ratio i realy want to know about it.
if any one knows reply me as early as possible

also i hv attached sheet please go through it.

 

ratio is just the left stock divided by the right stock.

 

Its not just left diveded right.
please do through the sheet that i hv attached in privious MSG.
and reply me