November Pair Trade of the Month

A Lesson in Trade Management Techniques

CRM vs. NUAN

$497 Profit in 5 Market Days or -$385 Loss in 40 Days…

($10,000/leg)

Watch this short video in pair trade management techniques that highlights how applying a trailing stop or trade-to-target approach to your pair trading signals can significantly impact your profit and loss account consistency:

trade management techniques

A key element to your trading plan is the application of trade management techniques, which are critical, but before you can manage a trade you need high-probability trading signals to analyse and decide whether to execute.  That’s where our Top 30 come in.

Let us explain…

PairTrade Finder®’s TOP 30 U.S. Equities Pairs & Pair Trading Signals

We analyse over 2,200 U.S. equities to find you the best stock pair trades! We update this analysis on a quarterly basis to ensure these pairs stay fresh and their correlations and cointegrations strong to offer you the highest-probability setups. The new TOP 30 include an RSI-Filter for additional filtering. All pairs must meet strict profitability and robustness measures as follows:

  • USA Exchange-traded (NYSE/NASDAQ/AMEX): > than $5 bln mkt cap (most much larger), > $10 million/day of average daily traded volume($), easy-to-borrow
  • Similar fundamentals: same national market, same sector, usually same industry sub group. Preference for beta-similar, market-cap-similar pairs
  • Backtested with a +/-2.7 standard deviation Entry Stretch, +/-1.0 standard deviation Exit Stretch on the Core Ratio of the pair’s share prices
  • Three-year backtest period, Stretch & Ratio Moving Average set to 63-day lookbacks
  • COINTEGRATION: We use the Augmented Dicky Fuller test for co-integration and select only pairs with a p-value of 0.10 or less over the 3-year period
  • AVG. CORRELATION: of minimum 50%, preferably higher over the three-year period. Lower correlation can be tolerated if pair is strongly cointegrated and scores highly on all other criteria
  • Minimum Average Profit per Trade of $200, preferably $250+ (based on $5,000/leg)
  • Compound Annual Growth Rate of Net Profits for each pair preferably in excess of Maximum Drawdown % i.e. positive reward/risk
  • Maximum historic drawdown < 20%, preferably <15% (before leverage)
  • Win Rate at least 70%
  • RSI Filter Applied: Only trades that trigger with a 14-day RSI of the Ratio at an extreme reading are called for signals
  • Maximum Days in Trade of 60 days. This setting represents our time stop. Average days per trade is around 12-15 days

How Can I Get Them?

Subscribe today and receive a 15-Day Free Trial of PairTrade Finder® PRO with these FAST 50 U.S. Equities Pairs PRELOADED into your Watchlist.  PTF PRO will immediately begin generating live trading signals from these pairs for your further review!

We also provide you with our eBook with 11 Pro Trading Tips, our 13 Tutorial Videos, and a 4-HOUR, 13-LECTURE PAIR TRADING VIDEO TRAINING COURSE taught by professional pair traders, including how to backtest for the best pairs, filter trading signals for entry, apply sensible position sizing and trade management techniques, and manage a portfolio to give you the best shot at reaching consistent profitability.

Find out all about it at www.pairtradefinder.com

Happy trading.

Geoff, Paul & The PairTrade Finder® Team

NB: The TOP 30 example pair trades in PairTrade Finder® PRO and the trading signals generated therefrom are provided for informational and educational purposes only. They should not be construed as personalised investment advice. It should not be assumed that trading using the parameters demonstrated by the Software will be profitable and will not result in losses. Please see our full Terms & Disclaimer here.

Share

Comments are closed.

Post Navigation