The Pair Trading Strategy

Pairtrade Finder is built around the pair trading strategy. Pair trading involves buying one instrument
and at the same time shorting another instrument. This leaves you market neutral, you’re not
betting on the underlying direction of the market, you’re betting on the relationship between 2
correlated instruments.
Pair trading or statistical arbitrage as it’s more commonly known in the investing world, is the most
popular trading strategy amongst hedge funds, as they recognise the reduced risk and ability to
produce returns in any market environment that the pair trading strategy delivers.
Pair trading has been around since the invention of markets, Jesse Livermore, probably one of the
most famous traders of all time, used pair trading back in the late 1800s, he would find a strong
stock then short what he called the ‘’sister stock’’. Pair trading really took off with large investment
banks and hedge funds in the 1980s with the help of computers.
Today, pair trading is still a new concept amongst most online traders; however that is quickly
changing; more and more online traders are beginning to see the benefits of the pair trading
strategy. The go-go days of 1999 where you could wake up and buy yahoo, go out for breakfast and
come back and have made 3k are gone, markets are a lot more sophisticated now, and so too must
be your trading strategy.
With pair trading, it doesn’t matter which direction markets go in, up, down or sideways you can still
profit. You risk is greatly reduced as you not subject to large directional price shocks the market can
often experience. Using pair trading, you can safely use leverage to magnify your position size,
something that is not safe when betting on a one way direction.
Pairtrade Finder allows you to design, test and implement your very own customized pair trading
system. You can import over 1,000,000 different tradeable instruments from around the world and
look for the best pair combinations, and then be notified of entry and exit signals for those pairs. You
can further analyse the trading signals with the help of our own custom charts, formula’s and
fundamental analysis. No other tool available allows you to do all this so easily.
We urge you to take some time out of your day and go through this user manual with Pairtrade
Finder open, the 60 minutes you invest in learning our proprietary software is sure to pay handsome
dividends and could dramatically change your trading and your income.
You may find it easier to print this user manual and have it in your hand whilst learning our software.
The user manual is designed to flow from one section to another, giving you an overview of the
software and teaching you how to extract the most value from it.