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ASX Stock Pairs Trade Journal

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Happy new financial year everyone, may we all make more money than last year!

New trade

Long EQN @ 2.70
Short OMH @ 1.38
 

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dont take this the wrong way,

but why are you selling a system which is apparently so successful.
 
beerwm said:
dont take this the wrong way,

but why are you selling a system which is apparently so successful.
Click to expand...

The lack of business sense of people on a stock forum never ceases to astound.

:bunny:
 
beerwm said:
dont take this the wrong way,

but why are you selling a system which is apparently so successful.
Click to expand...

There are few reasons why you wouldn't want to sell a successful system.

1. By selling the system and having lots of people following it, your system loses its effectiveness or edge. This is not the case with Pairs Trader. It is not actually a system, but a calculation tool with alerts set to YOUR system.

2. You have made so much money that you couldn't be bothered exploiting the other assets of your business - i.e. the software program.

There are always risks with trading, pairs trading included. It's a no brainer to supplement that with a low risk software vending business at very low incremental cost.
 
beerwm said:
dont take this the wrong way,

but why are you selling a system which is apparently so successful.
Click to expand...

Valid question. There are many reasons why I do this. Firstly im targeting a niche in the trading services industry, providing something that actually works, this separates me from 99% of the garbage out there and selling it doesn't harm my trading in the slightest, it actually improves it, ive built a community of pair traders some new, some experienced and just about all of the enhancements/features have been based on client feedback, suggestions and requests and ive learnt an aweful lot from other people using it. Its also helped build my contact list and meet alot of new people, I talk to hedge funds, stock brokers, prop traders & industry professionals on a daily basis, so when I launch my own hedge fund I will have no shortage of potential clients. Plus no 2 traders will make exactly the same trades over a period of time and the system is highly customizable so there isn't everyone trading on exactly the same stock at exactly the same price and hedge funds use this strategy with billions of dollars and it still works, this is because there is more money floating around that causes these divergences than money looking to arb them away. Institutional buying/selling pressure according to their shopping lists causes these moves and we come in and provide liquidity and aide in price discovery based on the theory of relative value. Also successful trading is a bit boring and lonely, I like to have interaction with other traders and I get a real kick out of helping other people, Ive had guys tell me they payed for the program within an hour of purchasing, this gives me immense satisfaction.
 
New trade

Long SGX @ 4.90
Short NCM @ 31.27
 

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New trade

Long STO @ 13.34
Short OSH @ 5.33
 

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  • OSH-STO2.jpg
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Yes bochman, Im all over it like a rash, thanks for watching out.

Sold SGX @ 4.92 (0.40% profit)
Covered NCM @ 29.52 (5.92% profit)
 
New trade

Long WOR @ 21.59
Short WES @ 23.04
 

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New trade

Long ANN @ 8.18
Short AMC @ 5.02
 

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Pairs Trader: top thread. I've just joined the forum to keep tabs on this thread and will be checking out your software.

Posters: a basic record of PT's record on this forum attached.
- avg trade return 3.8% (gross)
- cumulative return 126%
- over 33 closed trades
- max loss 9% (or 90% if using CFDs on 10% margin)

I think the numbers show that the approach can work over the LT.
 

Attachments

  • 090711 PAIRS TRADER.xls
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The return calculations you have stated are no strictly correct. It depends on his position size relative to total capital.

Suppose PT had $100K and put $10K (10%) on each leg of the transaction... he has returned 126% x $10K = $12.6K. Divide this over his total capital $100K = 12.6%.

Basically you need to multiply the 126% return x size of each leg, assuming that he did not risk his full capital on each leg.

Still great outcome regardless, but not 126%. And thanks for collating and sharing the spreadsheet.
 
PT: Am just making my way through your demo and recent trades posted. re the last STO/OSH trade that is still open - on your software platform the correlation coefficient between the two has decreased from around 90% early May to a current 7%.

- is this not the main variable (the premise of pairs trading) you use to screen for pairs?
- why did you take this trade?

Thanks.
 
Thanks for doing the summary sam, and yes I use about 30% of my a/c for each trade position sizing. So my return since the start of this journal is about 48%, pretty good considering Ive only taken 37 trades since February and my overall a/c exposure is usually pretty low.

Yes OSH/STO has un-usually low correlation at the moment and I wouldn't normally take a trade on a pair with corr this low, however Ive always liked this pair and its produced good results so I can break that rule this time, but generally I only stick to pairs above 70% correlation, you have rules, but you gotta know when you can break them, it comes with experience.
 

I pairs, I was curious what your position is for each leg in relation to your account.

BTW, congrats of your performance.



Nick
 
PT:

the EQN & OMH pairs seem to be doing badly.
Are you out, or averaging in (more)?
 
nkny, 30% for each leg.
bochman, yes that pair is currently down, holding onto it, not layering in.

new trade

Long PPT @ 25.29
Short AMP @ 4.65
 

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  • AMP-PPT2.jpg
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Closed trade for profits

Sold STO @ 13.45 (0.80% profit)
Covered OSH @ 5.20 (2.40% profit)
 
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