Pair trading - Frequently Asked Questions

1. What is Pair trading?

Ans: Pair trading is a market neutral strategy which enables traders to be profitable in all market conditions such as uptrend, downtrend or sideways movement. This strategy involves statistical arbitrage of two highly correlated stocks preferably in the same segment having the same macro dynamics, which has temporarily diverged i.e. one stock moves up while the other moves down, the pairs trade would be to short the outperforming stock and to long the underperforming one, betting that the pair would converge. The divergence in the pair could be caused by temporary supply/demand changes, large buy/sell orders for one stock, reaction for important news about one of the companies, and so on.
 

2. Does the strategy work in Indian Markets?

Ans: Yes, this strategy is a very profitable strategy to trade in the Indian Markets.
 

3. What kind of returns can be expected?

Ans: We do not guarantee any returns. We are only a software provider. Please Backtest and trade after understanding the risks involved. We are purely for Education Basis.
 

4. Does myMarketStrategies.com give tips or Pair trade calls?

Ans: No, myMarketStrategies.com is not a tips provider.
 

5. What about the Software training?

Ans: Please refer to Pair trading book by Mark whistler to understand how to trade Pairs using our ratio chart. Also refer to our free youtube video.
 
 

7. Is it completely risk free strategy?

Ans: No, there is no strategy in the stock market which is completely risk free. However, the risk in this strategy is very minimal as we are hedged and it is market neutral.
 
 

9. Disclaimer for using myMarketStrategies.com

Ans: Disclaimer


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