Written by Mark Whistler, a licensed securities trader and broker and leading arbitrage expert, Trading Pairs clearly illustrates this profitable technique, and allows you to gain a new perspective on the markets as well as a new approach to investing. In addition, if you have access to the Internet and Microsoft Excel, the companion website can help you put everything in this book to practice, as well as track your pairs.
"Mark Whistler has produced the ultimate guide to pairs trading that is a must read for any technical or fundamental market trader. Better yet, he s done so with a sense of humor that makes for an even better read!"
cohost, Business for Breakfast, 760 AM, The Zone, KKZN
CHAPTER 1:The Nuts and Bolts.
What Are Pairs?
How Do Pairs Work?
Who Uses Pairs?
Mindset of Reading This Book.
CHAPTER 2: Why Fundamental Analysis?
How Fundamental Analysis Relates to Pairs.
CHAPTER 3: Market Basics.
Growth and Growth Ratios.
Growth, PE, and the PEG Ratio.
Tying It All Together.
CHAPTER 4: Technical Analysis.
Support and Resistance.
CHAPTER 5: Technical Analysis Indicators.
Chaikin Money Flow Oscillator.
Relative Strength Index.
CHAPTER 6: Basic Pairs Terminology.
Understanding the Correlation.
Spread, Differential, and Ratio.
CHAPTER 7: Importing Data into Excel.
CHAPTER 8: Understanding Correlations Steve Price.
CHAPTER 9: Correlation Simplified.
What Is a Correlation?
Where to Find Correlations.
Building a Correlation Using Excel.
CHAPTER 10: Understanding Stock Correlations in Relation to Indices.
Why an Index?
What Is Beta?
How to Apply Beta.
Where to Find Beta.
CHAPTER 11: Basic Statistics.
CHAPTER 12: Excel and Statistics.
Setting Up the Spreadsheet.
Average, Median, Mode, and Standard Deviation.
Understanding the Present Data.
How Do You Know Which Stock to Buy or Short?
Charting the Data.
CHAPTER 13: Differential versus Ratio.
CHAPTER 14: Applying Statistics to Pairs.
Understanding the Data.
CHAPTER 15: Taking a Step Back for a Moment.
CHAPTER 16: Moving Averages and Normalized Standard Deviation.
Differential Moving Average.
Normalized Standard Deviation.
CHAPTER 17: Money Management.
Why Money Management?
Psychology of Money Management.
Understanding How Pairs Can Be Dangerous.
CHAPTER 18 Money Management II.
CHAPTER 19: The Reality of Pairs.
Do Pairs Really Work?
Trader or Investor?
Making the Style Work for You.
CHAPTER 20: Trading an Actual Pair.
Trading Diary The Beginning.
Historical Time Line of Divergence Events.
CHAPTER 21: The Current Setup.
Understanding Where the Pair Is Now.
CHAPTER 22: Trading Diary.
CHAPTER 23: Correlating Stocks to Indices.
General Electric and ExxonMobil.
General Electric and the DIAMONDS.
ExxonMobil and the DIAMONDS.
The Three Wise Men.
CHAPTER 24: Option Basics Scott P. Evans.
CHAPTER 25: Understanding Volatility.
What Is Volatility?
Volatility Position Sizing in Your Spreadsheet.
Volatility and the Individual Stock.
CHAPTER 26: Understanding Volatility and Options.
Speed and Option Premium.
Option Strategies for Pairs.
CHAPTER 27: Using Technical and Fundamental Analysis with Pairs.
KBH Homes and Tol Brothers.
Moving Averages and Support and Resistance as Stops.
CHAPTER 28: Assorted Advice to Assist Trading.
CHAPTER 29: The Monitor Sheet.
CHAPTER 30: Conclusion.
The Market Bubble.
Words of Caution.
Last Words of Advice.
Appendix I Economic Indicator Summary.
Appendix II Web sites, Books, and Software.
Glossary Jonathan Crowell and with Additions from Andrew and Aaron Long.
About the CD–ROM.
The Pairs Trader (pairstrader.com).