Algokid

PAIR TRADE (independent oil & gas)

NYSE:XCO   EXCO RESOURCES INC
594 10 0
CORRELATION : 69 %
CO - INTEGRATION : .86

LONG XCO             @ : 9.63
SHORT SU @ : 31.18

will have to be patient with this trade......
www.passivestor.com
Algokid PRO
4 years ago
UPDATE : Oh Boy :/ , this is biggest headache in my portfolio so far , down approx 23 % on the pair, I enter the pair with delta @ 2.79. It since went up to 3.67 , hence why the huge draw down on the position so far. Wasn't kidding when i said I'll have to be patient with that trade ..........
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timwest PRO
4 years ago
Another great thing to do with pairs is to view the graph of the ratio: One way to see the ratio is to go to www.stockcharts.com and type in the symbol, followed by a ":" then the next symbol. The long position is typed in first. So this pair would look like XCO:SU typed into the symbol box. Ratio charts are wonderful to look at and maybe someday TradingView will allow us to view ratios right here in our favorite charting program. See what you think. Cheers, Tim
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Algokid PRO timwest
4 years ago
Hi Tim, this is great, I can now confirm my signals visually by having the ratio of the pair and then add the Bollinger Bands to the chart. thanks for tip :)
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Algokid PRO
4 years ago
Hi Everyone

Just wanted to share the continuing headache i'm having with this pair. When trading pair, I use the ratio and calculate it's mean ( or average) for the pass 100 days. Once i have that mean I then calculate the 1st and 2.5 standard deviation (+/-).

trades are open when the ratio is equal greater(and smaller) then the 2.5 standard deviation (+/-).

I exit once the ratio is below (or above ) the 1st standard deviation (+/-)
Like Tim mentioned ,You can easily visualize this by going on stockcharts.com, and enter the ratio between two stocks ( IE "msft:csco") and add the bollinger band to see the standard deviation ( i use 100,1 and 100,2.5)

here's the ratio for the current trade . you can that on Jan 9 , the ratio was lower then the - 2.5 standard dev. I entered the trade. The ratio was at 0.32. Today the ratio is at 0.24, now you see why the trade is losing money. My expectation was for the ratio to return back to - 1st standard dev. This is a nightmare situation for pair traders. go to the following link to see explanation.

http://i39.tinypic.com/2djwe9t.jpg

http://i39.tinypic.com/2djwe9t.jpg

Once the ratio feature ratio is availabe here, i'll be able to post my trades using the ratio charts and bollinger bands.

have a good weekend : Algo Kid :)
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sbokov PRO
4 years ago
Just wanted to let you know that we'll add spreads as a charting option. Can you add a request here? http://getsatisfaction.com/tradingview/
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Algokid PRO sbokov
4 years ago
Nice , that is great news, thank you :)
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excelvideotutor
4 years ago
Hi, please let me know what you think of this Pair Trading strategy where you trade based on when one stock may outperform another on a certain day. There is a really cool Excel tool to support automating the analysis behind this new day trading or pair trading strategy -

http://www.youtube.com/watch?v=r-8QNBxiGyo

<iframe width="560" height="315" src="http://www.youtube.com/embed/r-8QNBxiGyo" frameborder="0" allowfullscreen></iframe>
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excelvideotutor
4 years ago
Hi, please let me know what you think of this Pair Trading strategy where you trade based on when one stock may outperform another on a certain day. There is a really cool Excel tool to support automating the analysis behind this new day trading or pair trading strategy -

http://www.youtube.com/watch?v=r-8QNBxiGyo

<iframe width="560" height="315" src="http://www.youtube.com/embed/r-8QNBxiGyo" frameborder="0" allowfullscreen></iframe>
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Algokid PRO excelvideotutor
4 years ago
Hi,
yes i heard of that website. and it' another way to trade. But how will you place the trades. Based on your demo in excel, would go long only the stock that you expect to outperform, or go both long and short. I think most people using this will only go long, which is not pair trade as there 's no edge. But if the numbers on your excel sheet are correct, then there 's a high probability of success.

Would be great if you could test and post your trade here.
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