Q&A | MAR 2002
Q&A by Don Bright
Q&A by Don Bright PAIRS TRADING I read your article and your Q&A section in STOCKS & COMMODITIES this month. In both, you referred to “pair trading.” When I read that it was a strategy used successfully by your niece, I was intrigued. Would you please explain the strategy? — Scott Memmott Many of our successful traders use one form or another of a “pairs” trading strategy. There has been quite a bit of research into the subject, and even an article in a previous issue of S&C. Let’s start with the basic premise: Many stocks within the same or similar sectors tend to “track” one another — that is, they show correlated historical pricing. Let’s take an example that we traded a year or so ago, Merck (MRK) and Lilly (LLY). Both are pharmaceutical stocks, and both are highly capitalized Standard & Poor’s 500 index stocks....continuded
by Don Bright
Technical Analysis of STOCKS & COMMODITIES
The Traders’ Magazine since 1982
has had over 1,226,237 subscribers from 174 different countries.
37,000 Page Traders’ Archive for $89.99
To continue reading, sign-up for trial access to Traders.com and the S&C Archive — 37,000 pages of trading ideas!
After verifying your email address, you will have limited access to the S&C Archive, as well as access to a Digital Edition of S&C, and access to Traders.com Advantage and Working Money for 30 days.
Not a subscriber to Technical Analysis of
STOCKS & COMMODITIES magazine?
Click
here to subscribe, or request
a trial subscription.
Log-in now to view articles from the S&C Archive.
Your Subscriber ID is located at the top of your magazine label, highlighted here in red.
Your last name can be found on the second line, highlighted here in blue.
*If you have a company name on the label, that can also be used. It will appear below your name on the label.
If you do not have a Subscriber ID on your label, you can find it on your statement or renewal form.
For help locating your Subscriber ID number, please call us at 1-800-832-4642 or send an email to Survey@Traders.com. If sending an email, please include your name and mailing address.