Advanced Pairs Trading
 The Secret Behind Profit In Pair Trading  

Understanding evaluation of the risk-to-reward for the pairs
Being able to read the market
Long vs. Short position sizing and management
Low Priced Stocks
Exact Trades - Entry, Target, Stop with 80% Accuracy

The first in-depth analysis of "pairs trading"

Traders have hundreds of technical tools and price action strategies to help them take advantage of price trends and ranging markets, but pairs trading is something completely different. Pairs trading uses correlations and divergences between two stocks in an attempt to capture a profit. While it isn't riskless, by understanding how pairs trading works, how you control risk and how you manage profits, it's a great tool to add to your trading arsenal because the strategy isn't dependant on market direction.

What is "pairs trading" ?

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.

pairs trading example

Pairs trading is a market-neutral strategy in its most simple form. The strategy involves being long (or bullish) one asset and short (or bearish) another. If properly performed, the investor will gain if the market rises or falls. Pairs Trading reveals the secrets of this rigorous quantitative analysis program to provide individuals and investment houses with the tools they need to successfully implement and profit from this proven trading methodology. Pairs Trading contains specific and tested formulas for identifying and investing in pairs, and answers important questions such as what ratio should be used to construct the pairs properly.

Why Pairs Trading Works ?

  • Co-integrated pairs are assumed to be mean reverting in nature.
  • Once the spread diverge from its mean, the probability of reversal increases.
  • With the chosen pair from the same industry and sector the extreme divergence from the mean are very rare.
  • The strategy’s profit is derived from the difference in price change between the two instruments, rather than from the direction in which each moves.
  • Statistical arbitrage is based on the assumption that the patterns observed in the past are going to be repeated in the future.
  • The natural extrapolation of pairs trading strategies consists of the operation of a group of stocks against another group of stocks, or generalized pairs trading.

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COURSE CURRICULUM

A practical approach for pair trading & analysis

BASIC LEVEL

Lecture 2 : Statistical Arbitrage

Lecture 3 : Pair Trading Strategy

Lecture 4 : Implementation Methodology

Lecture 5 : Example of Prices of two Stocks

Lecture 6 : Pair Ratio Behavior

Lecture 7 : How to get profit

Lecture 8 : Why Pair Trading Work?

Lecture 9 : Key Decision for Pair Trading & Risk Area

Lecture 10 : Investor Decisions

Lecture 11 : Basic Stats

Lecture 12 : Stationary Process

INTERMEDIATE LEVEL

Lecture 13 : What’s Co-integration?

Lecture 14 : Cointegration and Error Correction

Lecture 15 : Correlation Vs. Co-integration

Lecture 16 : Correlation Calculation & Excel Excercise

Lecture 17 : Co-Integration

Lecture 18 : Co-Integration- Mathematical Definition:

Lecture 19 : Co-integration calculation

Lecture 20 : Pair Ratio Movement for Above Example

Lecture 21 : Z-score

ADVANCE LEVEL

Lecture 22 : Process of Pair Selection

Lecture 23 : Points to Focus

Lecture 24 : Result Nifty-Banknifty

Lecture 25 : Few Examples of Pair

Lecture 26 : Other key points to be kept in mind

Lecture 27 : Practical and Practice session

Course Key Features

Our courses offer students the opportunity to customize their learning experience, engage socially and intellectually, and achieve academic excellence.

In-depth video lectures

Trading concept and charts are explained with interactive audio video lectures. Each module will enhance your knowledge to understand the concept under the guidance of our experts with scheduled online class-room and doubt clearing sessions.

Live Doubt Clearing Sessions

Live Doubt Clearing Sessions and practical sessions as per current market scenario also scheduled time to time. Where students can disucess with teacher and students that create very good interactive sessions. All sessions are also available in recording format for life time.

Convenient Online/Offline

The course is easy accessible with time flexibility as it is available in your laptop or desktop 24*7 by DVDs (No Internet Access required). There is no waiting for the class and you get lifetime access on our learning portal to join live classes and recordings.

Lifetime Access

You get lifetime access to the Learning Portal. The Class recordings and presentations can be viewed online from the learning portal. Also, your login will never get expired.

Exclusive Learning

Our course content is designed by industry experts who have decades of real trading experience keeping in mind the basic requirement of a trader or a broker.

Affordable Price

The potential return on investment is significant. The course will add value in their trading decision and one can easily recover their invested money during their course period.

24x7 Support

Our 24x7 expert support team will be available to help through email, phone or Live Support for any issues you may face during the Lab Hours.

Certification

There are continuous assessments throughout the course duration. Such assessments are in the form of quizzes and assignments & will encourage constant learning and self assessment. We certifies you based on the Assignments & Quizzes review by our Expert.

Advantages of Pairs Trading

Pairs trading is a market-neutral strategy that boasts several advantages:

Pair Trading is Market Neutral

In Pair Options trading the overall market movement does not affect your trade and your profit only depends on the relative performance of the stocks. If you correctly predict which stock within a stock pair will expire in the money, it does not matter even if the market went down. Pair Trading significantly reduces the market risk and enables you to focus on the stocks and not the markets, which is especially important in today's volatile and unpredictable markets.

Pairs Trading is Simple

Pair Trading has only three parameters to choose from: position, option duration and investment amount. There are only two possible results: "In the money" or "Out of the money". If you are right about the better performing stock, you will receive the predetermined payout. If the other stock in the pair performs better than the one you chose, only the initial deposit on the stock pair will be deducted from your account. Payout amounts are known before you place an order.Once you purchase an option, you will see your position payout in real time.

Profit regardless of market direction

Another attractive feature of pairs trading is the ability to profit whether the market is going up, down or sideways. This is because the strategy does not depend on market direction, but on the relationship between the two instruments. To clarify, long-only traders (who are bullish) can only profit from rising markets. Short-only traders (who are bearish) profit when the markets are falling. To a pairs trader, the market direction does not matter; it’s the relative performance of the two instruments that determines each trade’s outcome.

No directional risk

Directional risk involves exposure to the direction of price movements. For example, a long position is exposed to the risk that stock prices will move down. In pairs trading, a second instrument acts as a hedge against the first, thereby removing the directional risk. Because profits depend on the difference in price change between the two instruments, rather than from the direction in which each moves, directional risk is removed.

Both Fixed and Floating Pair Options

In Pair Trading, options come in two distinct "categories": Fixed Pair Options and Floating Pair Options. With Floating Pair Options you can close your position before the option expires and take early profits or stop your loss. Each type of option has a different performance value based on the start time and market conditions. There are 50 pairs to choose from on stock exchanges worldwide.

Pair Trade Choice of Risk Level

Pair Options rate of returns for each stock is correlated with the inherent risk in the position. Therefore, a higher return rate results in a higher payout if your trade expires in the money, but with a higher risk. When you open a Floating option position there will be a higher rate of return for the stock that is out of the money and a lower rate of return for the "leading" stock that is already in the money. If you want to lower your risk you may choose the stock that is in the money. However, if you prefer a higher risk and the chance for a higher return you may pick the stock which is out of the money.

Pair Trading Limited Financial Risk

Trading in Pair Options offers a fixed reward and great choice: risk is always limited and known. For each trade, only the amount you invest in the trade may be deducted from your account if your option expires out of the money. Additionally, you can earn high returns when the markets are lower as well as higher.

Contact Us

+91 99289-77488

We would love to assist you!

Email Us

info @ moneymantrastock.com

Do you have any questions / query about our services email us.

RECEIVE A CALL BACK

If you want to know more about this training program

FREQUENTLY ASKED QUESTIONS

We believe that every aspect of our service should be very clear to the clients before they get associated with us, we think clarity brings confidence and these FAQs will give more clarity to the proposed services.

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.
Yes, this strategy is a very profitable strategy to trade in the Indian Markets.
One can expect 5% return consistently per month on this strategy. Your returns can further be increased by using a discount brokers.
Training will be provided to all those who enrolled, to help you use excel tools to analyse pairs, enter the pair trades in the market, manage the pair trades as a professional trader.
Capital greater than 2 lakhs. Preferably 4 lakhs capital to take more than 1 pair trade at a time
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.

Contact Us

+91 99289-77488

We would love to assist you!

Email Us

info @ moneymantrastock.com

Do you have any questions / query about our services email us.

RECEIVE A CALL BACK

If you want to know more about this training program

FREE Trading Training Videos

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