Trading Mentality Required

Your personal attitude require to succeed in pair trading is the same attitude required to succeed in
any other style of trading or anything else in life. Every trading system or style will have drawdowns
and soft patches, that’s the nature of the beast. There is not one trading system that will produce
profit, day in day out all the time, there will be times when market conditions aren’t favourable for a
particular trading style.
Anyone can handle winning, it’s how you handle losing that matters. You can’t control what
happens, you can only control how you respond to what happens. The good thing with pair trading is
naturally it has a high win rate around 70%, meaning 7 out of 10 trades will produce a profit, having
a high win rate makes it easier to stick to a strategy. That doesn’t mean you can’t have 3 losing
trades in a row, and you inevitably will at some stage if you trade long enough. What matters is your
performance after 10, 20 or more trades. It’s a game of numbers and you need to treat your trading
like a business where your losses are your business costs, are your wins is your business revenue, so
long as you collect more revenue than costs after the quarter you have a profitable trading business.
By default, we are raised to believe that if you do something and it is wrong, that you must change
something. This is a natural human reflex that is deeply ingrained in our psyche, this is also
detrimental to successful trading. You have to continue to use the same method even if it isn’t
working. This is where most traders fail with trading systems, you can find a trading system with an
excellent back test report and equity curve, however when the inevitable drawdown comes, the
traders starts chopping and changing things or even worse, completely abandons the method.
What you need to continue trading through a drawdown is confidence in your trading method. The
advantage with pair trading, is that it is designed around a very robust strategy with sound logic. Pair
trading is not a fly by night strategy that most online traders employ, it has been around for 100s of
years and will continue to do so. It is not based on some voo-doo combination of the MACD, RSI,
chart pattern and day of the week filters, which sometimes may produce good results, however
trading systems like this aren’t based on sound logic and when the drawdown comes you will have
no conviction to continue trading it.
Successful pair trading, like anything else in life, requires planning, persistence and patience. You
can’t expect to become a millionaire overnight, it takes work and time to achieve. Plenty of practice
and record keeping will help you get better at your craft. Try and learn as much as possible, ask
other successful pair trader’s questions and look for new ways to improve your trading. Pair trading
is a method you can use to generate a consistent income and capital growth after you have
mastered the basics.
If you are tied of chopping and changing your trading method, or looking for the non-existent holy
grail, or sick of being promoted the latest ‘’hot stock’’ then make it your objective to learn the pair
trading method to the best of your ability and guided with our software and ongoing support you are
significantly increasing your chances of becoming a successful trader and living a lifestyle most only
dream about.
Pair trading does work over time as evidenced by the results in the back tester, if you stick to it, you
will succeed, the impatient and greedy won’t.