New Year Reflection on Trading: You Know Nothing…

As a first reflection on trading to kick off the year 2020 (as part of the Western world measures the calendar), we would like to link to a blog post by Jared Dillian, and ex-Lehman Brothers trader, now writing for Real Investment Advice.

Why do we highlight his post?  We think it shows our reflection on trading – that in a world of ever changing market regimes, where objective truth (value) is non-existent – perhaps a legitimate way of approaching profit generation is to follow a trading system that seeks to profit from RELATIVE value.  The perceived value of Stock A vs. the perceived value of highly correlated and co-integrated sister Stock B.  What is Stock A worth? Nobody really knows.  It’s worth what the market says it’s worth at this second, and only in the volume of the offer…same for Stock B.

But logically – regardless of market regime, volumes apparently on offer and objective value – if A and B are intrinsically similar, over time their relative PRICES may converge.

Does it work all the time?  No.  Does it work more often that not?  Probably.  Can you make money trading the concept.  Yes.  As thousands of long/short traders and hedge funds have demonstrated over five decades and academic research has exhaustively shown.

So as you get your trading plan fired up for 2020, we think you will profit from pair trading.  Why not go to and give it a go?

Over to Jared…

After 20-Years Of Trading: You Learn You Know Nothing

Happy Trading!

The PairTrade Finder® Team.

Post Navigation