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RRG - What order types are used for pair trades?
HoneyPot
✭
@Julius_RRG
Hello Julius,
Thanks for your Sector Spotlight series. I am very interested in the segment on Pair Trades and appreciate the Jan 13 blog article "From a Trading Idea to a Position" explaining the creative process. A question to better understand the success of the pair trades. What kinds of orders do you use? Please feel free to cover the spectrum of Stop Limit, OTA, Buy to cover, etc. to understand the entries and exits, from profit and risk management perspectives. I use a simulator to practice, test and improve before deploying capital. Thank you.
Hello Julius,
Thanks for your Sector Spotlight series. I am very interested in the segment on Pair Trades and appreciate the Jan 13 blog article "From a Trading Idea to a Position" explaining the creative process. A question to better understand the success of the pair trades. What kinds of orders do you use? Please feel free to cover the spectrum of Stop Limit, OTA, Buy to cover, etc. to understand the entries and exits, from profit and risk management perspectives. I use a simulator to practice, test and improve before deploying capital. Thank you.
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Best Answer
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Holy Crap..... I have not been here for ages... Sorry about that. I usually try to trade in more liquid names with small spreads and execute at market. Once in the trade I manage SL and TP based on the RS - Line of the pair. Hope this helps and is still of value after all these years
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Answers
IMHO, the sideways stock market is behind us and it is now moving to a bullish trend, albeit with occasional stumbles.
Back in Jan 2020, I wanted to study your pair trade strategy to determine if I could obtain above normal (8-12%) returns without the use of margin. The market now has many more leveraged ETFs that are index-based and/or single stock based and quite liquid. This enables a swing trade strategy using very few ETFs.
I still follow your weekly post. The one that StockCharts published today (Feb 2, 2024) is a keeper for me. It gives me insight into your analysis process and how easily the RRG can be taken to a watchlist.
Thanks again. Best wishes.