Discussion in 'Strategy Development' started by GFT, May 24, 2004.

  1. GFT


    mini dow / mini E
    $5 / $50

    how do I setup pairtrading or spread trading between these products? How does it work?

    at the moment a move of 9 dow points = 1 s&p point

    so i buy 9 dow mini and sel 1 mini E is this correct??

    who has experiance with it?

    email me or pot youre opinion about it here
  2. you're very eager to lose money aren't you?
    I don't know how to pair trade but I think you should get some training before you actually do it in realtime. Good luck.
  3. You'll have to decide if you want to play the pair based on absolute spread or the ratio of their values. The former is easier (you can do it with 1 contract on each side) but the later is more market neutral (over the long run).

    But I agree with the other poster that you have to be careful. The Dow, with only 30 stocks, is much more sensitive to specific news that hits one of the issues. Just look at how the Dow has been lagging the S&P the past couple of weeks and then take a look at Altria. MO's recent weakness due to tobacco litigation has probably shaved a hundred or so points off of the Dow. A similar occurance for an S&P stock would just be noise.