Thursday, October 4, 2012

The Case For Pair Trading In This Market.

For our loyal readers and members you will know how we feel about pair trading in highly volatile markets without a real trend in place.  We wanted to publish an older article that we feel is necessary for anyone who is not hedged or pairing during the last couple months.  Since September 1st our members have enjoyed +30% gains, which +12.75% have been derived from pair trades.  This is vs. The S&P 500 +3.48% gain for the same time period.  Pair trading maybe not be exciting for those of you who are day trading because your are neutralizing beta.  However, when you have a the S&P move 50 to 100 points in 5 trading days you have to be insane to have 100% directional exposure.   The following article was written back on August 5th on Forbes  �Are we heading into another Bear Market? � Relieve your Anxiety; Focus on out-performance via �Pair Trading�.

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We want to take a look at trades we have recommended and if you held today since we wrote the article on the trade idea.   As you can see all financials have been lumped together during the trade duration and no outperformance.  If you want to get long

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