Pair-Trading

[vartika]

Not necessary to PM, Mukherjee, just post the details here.

Hi,

I would like to knw that r u in foreign currencies trading i.e. forex trading or Stock trading.

vartika

 

[viharpatel]

any best website who gives idea for pair trading in stocks? please help

 

[viharpatel]

my first pair trade give me 6000 in just 2 days. i was not expected that fast but good return in trail trade of pair trading.

 

[angira]

my first pair trade give me 6000 in just 2 days. i was not expected that fast but good return in trail trade of pair trading.

Nice thread viharpatel,

Can U pls post some ideas behind u'r trade.
which pair u've traded ? &
How could u took position in u'r trade ?


Angira...

 

[viharpatel]

I Just Bought PFC fut at arnd 194 1 lot and sell 1 lot rec fut at 227.3
on 9th feb.



and i square off position on friday when pfc arnd 194.30 and rec 224.


so profit is ((194-194.30)+(227.3-224))*2000=7200

Still I am a new bias in this idea. Thats why i post this thread to collect more information. So please people share ur idea on this pair trade.

Nice thread viharpatel,

Can U pls post some ideas behind u'r trade.
which pair u've traded ? &
How could u took position in u'r trade ?


Angira...

 

[angira]

I Just Bought PFC fut at arnd 194 1 lot and sell 1 lot rec fut at 227.3
on 9th feb.



and i square off position on friday when pfc arnd 194.30 and rec 224.


so profit is ((194-194.30)+(227.3-224))*2000=7200

Still I am a new bias in this idea. Thats why i post this thread to collect more information. So please people share ur idea on this pair trade.

Hi Viharpatel,
This is something like Arbitrage? Am I right man ?
thx

Angira...

 

[viharpatel]

May be its called arbitrage. But i think arbitrage is worked on same script with different exchange or in cash-fut. if any correction please tell me.

Hi Viharpatel,
This is something like Arbitrage? Am I right man ?
thx

Angira...

 

[4xpipcounter]

Vihar, pair trading is another term for hedging. It means initiating a position on the same market going long and short at the same time.
It is a strategy I use. I use it to gain pips (I trade forex.) when a position goes against me. The problem with that strategy is you become married to the pair until both ends are closed. It can be highly profitable, but if you don't know what you are doing, it can also spell your doom.
I suggest all newbies to stay away from it. It requires, JMO, strong intestinal fortitude and excellent money management skills.

I come across Pair trading Strategies. But Not Getting Much Idea. Please Share Your Idea About This Strategies So I and other people like me understand the concept. And suggest some good pair stock.

 

[viharpatel]

I Just Bought PFC fut at arnd 194 1 lot and sell 1 lot rec fut at 227.3
on 9th feb.



and i square off position on friday when pfc arnd 194.30 and rec 224.


so profit is ((194-194.30)+(227.3-224))*2000=7200

Still I am a new bias in this idea. Thats why i post this thread to collect more information. So please people share ur idea on this pair trade.

Did u see todays rate of My Pairs?

If I hold till now the profit is

pfc 200.60 and rec 216.75

so profit is ((200.60-194)+(227.3-216.75))*2000=34300

 

[iamroopak]

surprised that nobody has yet explained pair-trading properly..

well, u basically eliminate market specific or systematic risks, and bet on narrowing or widening of price differential between a pair of stocks..(also called beta neutral strategy)

For example, last year, with the kind of corporate ethics anil ambani has and with all the problems, u expected adag stocks to go down. So you could have shorted it. But what if the market started going up? You could have lost money then...

any other way to make money even if the market went up? well, here pair-trading strategy comes. u could have gone long on Mukesh, and short on Anil.. and whether market went down or up, adag wud have under-performed mukesh's stocks.. of course, u wud have to use proper hedge ratio, beta analysis etc..and this strategy gave good returns in the last year.

this example is a bit crude, but the principle remains. u eliminate the market-risk and bet of price deferential to narrow or widen..