Learning How to Do Pairtrading

Written by Mark Hoppus

If you want a little adventure in your stock trading, you should go check out http://www.pairtradefinder.net. You can get an app to help you with finding better pairtrades. Those are when you buy two stocks that are similar. One might perform okay, and the other one might be losing money. This is a system of knowing when to buy and sell so you make money either way the stock is going. However, you really do need to know how to pick your pairs for trading stocks like this.

Another thing you need to have some experience in is making a short sale of one of the stocks. This is the tricky part. You need to know when to just go ahead and sell when the price is climbing. You do not want to wait too long and take a chance it will drop again. Well, there is that chance you are taking, but you do not want to push it too far. Plus, you need to know when to buy an underperforming stock that is a pair. Finally, you need to know when to exit (get out of) both stocks.

This is not like buying a bunch of shares in a company you know will have steady growth over a period of years. This is speculation that can pay off in big returns or equally big losses. People that get into this type of pairtrading use money that they are not relying on for their retirement or daily living expenses. That is why it is an adventurous sort of trading. After you get your feet wet in trading company stocks, you will likely look for other investment opportunities that have a higher risk yet have a potential for much higher returns. Still, if you are going to get into pairtrading, you want good software to help you pick your pairs. No need to try and do the math on your own.

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