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Pairstrading

Monitoring to Entry – AN/PAGThis pair was added to our Awaiting Confirmation list on April 16 , after showing a potential setup for a long position based on price deviation. As of April 17 , the setup evolved further: The pair Started below the lower Bollinger Band , suggesting continued price dislocation. Stochastic %K and %D were both under 20 , indicating an Oversold condition. ADX = 12.0 – signaling a sideways market, favorable for mean reversion. DI-/DI+ ratio = 1.86 – still shows dominance of sellers, but that value improved (decreased) from the previous day. A strong bullish candle appeared, reinforcing the shift in momentum. Conclusion: Although not all indicators were aligned perfectly, the price structure and early momentum reversal were enough for me to trigger a long entry as of April 17. Now, I am monitoring this position with close attention to DI dynamics and further stochastic confirmation.
NYSE:ANLong
by YoavShachak
Two tempting short setups — but one is hiding real dangerWhich pair would you short? We’re looking at JCPB/BAB and AGG/GTO , both showing positive deviation and riding the upper Bollinger Band. At first glance, both look ripe for a short… but dig deeper, and you'll see very different stories. 🔹 JCPB/BAB Chart: Low ADX, balanced DI+ / DI− → classic setup for a mean-reversion short. But the last daily candle is a strong bullish bar — big, green, and decisive. This could be the start of a breakout , and shorting into fresh upside momentum is dangerous. Looks neutral — but hides bullish potential. 🔸 AGG/GTO Chart: Clear uptrend: DI+ dominates, price marching upward. Also touching upper Bollinger Band, so yes — shorting here is fighting the trend. But at least the risk is obvious , and you can frame the trade accordingly. Transparent trend = measurable risk. 🧠 Bottom line: JCPB/BAB may seem safer — but that green candle changes everything. AGG/GTO is clearly trending — risky to short, but less deceptive. 👇 So, if you had to short one of these — which would it be? Drop your take below. Let’s hear your reasoning.
AMEX:AGG
by YoavShachak
What is Bitcoin ‘Pairs Trading’? (Example: ETH/BTC)This is for anybody who wants to sell some Bitcoin but is still bullish crypto. 🚀 It’s also if you’re neutral on crypto but think Bitcoin is overvalued vs other tokens. It’s also just if you’re just interested to see a way to apply a pairs trading strategy . In case you’ve been hiding under a rock, Bitcoin just broke over $100k - No more waiting for the HODLRS!! Naturally after hitting this massive milestone, some traders are going to be thinking about taking profits. And if they’re thinking it, some of them are going to be doing it. But let’s forget about selling for a moment, are you really buying more BTC when it just hit $100k and it's up ~150% this year? So even if there is not more active selling interest, there’s probably less buying interest. I think you’d be mad (or very brave) to bet against Bitcoin. BUT Are these scenarios possible? Bitcoin trades sideways for a while after hitting $100k Alt season kicks in and other cryptos play catchup If you think yes to at least one of these, my team and me have been looking at a pairs trade What is pairs trading? Pairs trading in crypto is a market-neutral trading strategy that involves taking a long position in one cryptocurrency and a short position in another, based on the assumption that their historical price relationship will revert to the mean. The point is to profit from the relative price movement between the two assets, i.e. not the absolute ups or downs of one asset like Bitcoin. ETH/BTC I put this crypto pair this way around - I’m not sure if you’re meant to - it just kind of reminds me of EUR/USD in forex trading. So as a reminder, ETH/BTC is Ethereum’s token Ether priced in Bitcoin. When Ether outperforms Bitcoin it goes up and when Ether underperforms Bitcoin, it goes down. So it doesn’t actually matter if Bitcoin goes up, down or sideways, if you’re trading ETH/BTC - what matters is what one does relative to the other. Well this thing has been going down a lot! Until recently. Going back to the idea of pairs trading - the thesis here is that the Ethererum/Bitcoin price ratio has dropped to bargain levels and could be about to recover. I’m not going to lie to you - there are a lot of sore hands out there from trying to catch this falling knife! But this rebound off the 61.8% Fibonacci retracement of the 2020-21 rally has caught our attention. Dropping to the daily chart, can you see how 0.4000 has acted like a magnet to the price both from above and below? 0.4 is our line in the sand for long positions. Equally, our risk is well defined in this setup. A drop back under the 61.8% Fib level around 0.32 means the idea isn’t working and it's time to get out and let Bitcoin do its thing! How to trade it Specific entries and exits depend on your personal risk tolerance, but broadly there are THREE methods here: 1. Crypto-to-Crypto Spot Trading Trade ETH directly for BTC (or vice versa) on a cryptocurrency exchange. This is straightforward and involves holding the actual assets. 2. CFD Trading (Contracts for Difference) Speculate on ETH/BTC price movements using CFDs without owning the underlying cryptocurrencies. This allows for leverage and the ability to short-sell. 3. Spread Trading Buy ETH and simultaneously short BTC (or vice versa) with equal dollar value to profit from their relative price movement while minimizing exposure to overall market trends. But that’s just how we are seeing things? Do you think this is bananas, or could we be onto something? Please let us know in the comments Cheers! Jasper. Chief Market Analyst, Trading Writers
Education
by jasperlawler
ZSL/JDST: Potential Long OpportunityZSL/JDST pair is signaling a Long position at the close of yesterday, supported by multi indicators, suggesting a promising opportunity. ADX : Indicates no trend at present, and a quick look at the daily chart confirms it. Correlation : remains very high in the last few weeks. Close price : closed below lower BB. Historical test : I would be happier with more historical opportunities in the last few months to test, but generally it seems okay.
AMEX:ZSLLong
by YoavShachak
Trade Recap: MEDP & LSCC - 24/4/24 to 25/4/24Market Context and Indicators (Closing of 23/4/24): Directional Movement Index (DMI): * DI+: 42.59 * DI-: 11.53 * ADX: 19.75 (indicating a weak trend) Stochastic Oscillator: * %K: 94.34 * %D: 98.11 (both in the overbought territory) Correlation: * MEDP & LSCC: 0.8852 (strong positive correlation) Trade Information: MEDP Position: * Position: Short * Entry Price: $415.00 * Exit Price: $406.00 * Duration: 24/4/24 morning to 25/4/24 mid-day LSCC Position: * Position: Long * Entry Price: $70.39 * Exit Price: $72.35 * Duration: 24/4/24 morning to 25/4/24 mid-day Analysis and Strategy: Given the strong positive correlation of 0.8852 between MEDP and LSCC, paired with the overbought levels of %K and %D on the Stochastic Oscillator, we identified a potential reversal opportunity. The ADX at 19.75 suggested a weak trend, which further supported the hypothesis of an imminent price correction. Trade Outcome: * MEDP: Achieved a successful short trade with a profit of $9.00 per share. * LSCC: Achieved a successful long trade with a profit of $1.96 per share. These trades exemplify the effectiveness of leveraging correlation and technical indicators to capitalize on market movements. Key Takeaways: Utilize Correlation: Understanding the correlation between assets can provide insights into potential price movements. Monitor Indicator Levels: Overbought and oversold conditions, combined with trend strength indicators, can highlight profitable trading opportunities. Adapt to Market Conditions: Weak trends, as indicated by ADX, often present good reversal trading opportunities. Stay tuned for more trading ideas and market insights!
NASDAQ:MEDP
by YoavShachak
Pairs Trading Strategy. Two instruments in one chart We seek the development of a strategic chart indicator capable of visually concealing differentials between two financial instruments on a singular chart. Presently, we utilize a conventional approach whereby one instrument is opened and juxtaposed with another, resulting in the observation of two distinct lines. To enhance the efficacy of pairs trading, a hedge strategy entailing the purchase of one instrument and simultaneous sale of another correlated instrument, we endeavor to implement a more precise method wherein both instruments' disparities are represented as a singular line, candle chart, or similar graphical representation.
NYSE:VShort
by VladRibockins
1
MH Indicator on GBP/USD Vs. EUR/USD: Intra-day case study5-trade days (26th October 2022 to 01st November 2022), the MH (Market Hedge) Indicator was used to spot the Buying/Selling opportunity in the most correlated currency pairs of the World. In case of pairs trading one asset (GBP/USD) is bought/sold and simultaneously the other asset (EUR/USD) is sold/bought. In Currency trade, the most widely used leverage is 1:100, however, in the present case study, the leverage ratio was kept 1:50 (to be safer). Results: ROI was 57.26% in total of all the trades closed as encircled in the Chart. Out of the total 20 closed trades, only one was closed with losses (only $ 1.67 USD), highest profit from one trade was $ 7.38 USD, closed at 8:30 pm on 28th October 2022. Hence, you may assume the Risk-Reward ratio as 1:20 (0.05). Happy trading with MH Indicator Team, InvestSystemic
by InvestSystemic