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What is Pair Trading? Pair trading, also known as statistical arbitrage or spread trading, is a strategy that allows the trader to capture anomalies, relative strength or even fundamental differences on two stocks while maintaining a market neutral position. This powerful trading strategy once used only by large institutional investors and hedge funds has been adapted for implementation in your taxable trading accounts. Market neutrality has never been more important, as it allows the trader to capture profits in up, down, or sideways markets while giving you the freedom from having to predict the direction of the overall market. With pair trading you’re not trading the individual stocks based on their direction, but rather trading the difference between the two stock prices. This is called trading the spread differential and you’ll quickly learn that this key difference makes this type of strategy very different from other trading methodologies. In pair trading you’ll move away from the dependency of following the market’s direction and instead focus on trading the chart of the difference of the two correlated stocks. With pair trading two highly correlated stocks are traded simultaneously, one long and one short. A trade is initiated when the difference between the two stocks prices, or the Spread Difference (SD), moves statistically too far apart based on historical correlation and volatility. Pair trading is based on mean reversion, meaning two stocks that normally trade in the same direction become temporarily uncorrelated and eventually revert back to the mean . In this example of Exxon (XOM) and Chevron (CVX), the two stocks move $23 from the high to low in 2006. There were numerous 10% pullbacks and rallys where guessing market direction would have been very difficult. But the Spread Difference between them only moves $5, and continuously reverts back to its mean!!  What is Intraday Pair Trading ??
Intraday pair trading is a low risk, market neutral strategy that completely eliminates the need to determine which way the market is going to move that day. How many times have you been in a trade that had a perfect set up, only to have the market tank and turn your trade into a money loser? With pair trading, market direction is irrelevant, because you are long one stock and short another.
What exactly is the ISB Indicator? The heart of the Intraday Pair Trading Strategy is the Intraday Spread Band Indicator for Tradestation, or the ISB. The theory behind the ISB Indicator is that highly correlated stocks should obviously move together, whether it’s on a 1 year, 6 month, daily, or even intraday time frame. If two stocks that normally move together become temporarily uncorrelated, there is an excellent chance they will revert back to the mean.
The question is when is the move between two stocks that are highly correlated big enough to initiate a trade. The ISB answers that question! The ISB Indicator uses the following inputs to form an indicator that has upper and lower bands:
1. The historical correlation between the pair
2. The historical volatility for each stock in the pair
3. Two standard deviation factors
If the spread between the two stocks moves too far away from the norm, and starts to come back, there is a high probability that they will revert back to their mean. This creates a powerful profitable trading opportunity.
 The ISB Indicator tell you exactly when the reversion to the mean is taking place
If the spread moves away from the historical correlation and never starts to revert to the mean, no trade is initiated. That’s the beauty of the ISB Indicator: it only gets you into a trade if the spread is too large, and starts to change direction
NO MORE TRYING TO GUESS TOPS AND BOTTOMS!!!!
What is the Intraday Pair Trading Strategy (IPTS)?
The Intraday Pair Trading Strategy (IPTS) is a complete, easy to understand pair trading worksheet for Tradestation. It includes the ISB Indicator with Real Time trade alerts, the Spread Differential, the Spread Differential MACD (SD MACD) and the Spread Differential RSI (SD RSI) all in one worksheet! The SD MACD and SD RSI compliment and confirm the ISB Indicator, giving the trader a high probabilitly of a profitable trade.
In this recent example involving HD and LOW, a trade is initiated at $7.92 when the SD crosses back over LB1. SD MACD and SD RSI confirm. The spread reverts back to the mean 16 minutes later, for a quick profit of $.32. Later in the day, the same trade is done again!
 Please visit: WWW.DAYTRADEPAIRS.COM
for more examples The ISB Indicator Features:
* Updates in real time * Completely open source * Built in stop loss function * Built in alarms to alert you when a trade should be initiated and exited 22 Page Adobe Manual Includes:
* Section 1: Overview of Day Trading Pairs * Section 2: The Theory Behind The ISB Indicator * Section 3: Installing the IPTS into Tradestation * Section 4: How to use the ISB Indicator * Section 5: Free sources of correlations and volatilities on the web * Section 6: Customizing the ISB Indicator * Section 7: Creating a Workspace for the IPTS * Section 8: Enabling Alerts for the IBS Indicator Also Included:
*The Default ISB Indicator, plus over 20 pair specific indicators ready to use *Sample Tradestation Workspace ready to use * Free, unlimited email support * Free lifetime updates * A list of 25 highly correlated pairs that are highly profitable! Purchase and Contact Information:
The complete IPTS is only $44.50!! The Indicators in the IPTS only work with Tradestation. We only accept Paypal. If you navigated to this web site from Ebay and wish to purchase the IPTS, please use the "Buy It Now" on Ebay, or bid on the auction. You can also purchase the IPTS by clicking on the "Add to Cart" button below. Purchase with confidence as we are 8 year Ebay members with a 100% rating and Paypal Verified! Please email any questions to toptrader@mailbolt.com. Thank You!
Important Disclaimer Information:
Before purchasing this Indicator you must read and agree to the following terms and conditions of use. "Terms and Conditions" referring to governing your use of your purchase(s) and your relationship with seller. If you do not agree to these Terms and Conditions, do not make a purchase. Although we believe this information to be accurate, neither seller, nor its affiliates guarantee the accuracy nor assume any liability. Past performance is not a guarantee of future results. As is true with all information obtained from any given source, you are solely responsible for how you choose to use any trading Strategy and or Indicator. We are NOT making any recommendations to buy and/or sell any futures or stocks or forex issue. By purchasing a trading strategy/Indicator you agree NOT to hold seller, and/or affiliates liable for any monetary loss, and/or emotionally damage.
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