Trading Techniques | MAY 2002
Daytrading Stock Pairs by Mark Conway and Aaron Behle
Daytrading Stock Pairs by Mark Conway and Aaron Behle Tired of trading Level II quotes and one-minute charts? Try a market-neutral strategy. It can take years of experience to discover one unique insight to exploit that can consistently pull money out of the stock market. Most traders have a bias as to market direction and position themselves accordingly; however, market-neutral strategies are becoming popular for those who are tired of trading on the gerbil wheel of Level II quotes and one-minute charts. Pairs trading is a market-neutral strategy where a long position in one stock and a short position in a correlated stock are taken simultaneously. The profit principle of the trade is based on mean reversion — that is, two stocks that normally trade in the same direction become temporarily uncorrelated and eventually will revert to the mean.
by Mark Conway and Aaron Behle
Technical Analysis of STOCKS & COMMODITIES
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