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A Revolution in Pairs Trading
During the 1980s, a group of analysts working for Morgan Stanley struck gold with a new strategy called pairs trading. The goal is to match two highly correlated equities, trading one off against the other. When their prices diverge, the trade is entered. If the pair reverts to its mean trend, a profit is made on one or both of the positions. (Financial institutions have kept this strategy away from the vast investor public.)
The pairs trade is market-neutral, meaning the direction of the overall market does not affect its profit or loss. The pairs trade is also hedged. This is because the price movement of one equity offsets the other. These properties make this strategy low risk in any type of market.
We have developed a new strategy, called the Counter-Condor, which extends the pairs trading idea to inversely correlated equities.
Here are some of the characteristics of the Counter-Condor.
1. It trades inversely correlated ETFs, such as TNA and TZA.
2. Over 85% of the trades are profitable.
3. Profits per trade, ranging from 25% to 150%, are not unusual.
4. The strategy is allowed in IRAs.
5. The strategy profits whether the market moves up or down.
6. Because of the inverse correlation, the price change of one ETF offsets the other.
7. Unlike the classical pairs trade, the Counter-Condor does not short stocks.
8. Historic testing demonstrates low draw-down.
9. This is the ideal “Couch-Potato” strategy; once the trade is put on, lay back and relax.
Join our free webinar, September 23 at 7:00 PM to learn more about the Counter-Condor strategy. Questions will be encouraged. Sign-up here: http://spxtimer.com/webinar-signup.html
Recently, Dr. Jay Leavitt had served as an analyst to a hedge fund. He is also a popular speaker at a local investment club. Generally, his presentations relate to money management. As an analyst he has developed market timers and evaluated various money management ideas. His objective has been to develop trading tools that will minimize draw-down and still yield good profits.
Years ago, before there was Windows, he created and maintained the Cornucopia of Disability Information which was accessed over a precursor to the current Internet. This site was once featured in an early version of Computing for Dummies.
After earning his Ph.D. in Applied Mathematics, he spent a year at the University of Pisa, Italy on a Fulbright scholarship. Subsequently, he earned tenure and promotion at the University of Minnesota where he helped create their Department of Computer Science. Later, he became Director of Academic Computing at the State University of New York at Buffalo.
He has been on several boards of directors: Dept. of Rehabilitation, SUNY Buffalo; Aztech Corporation; SKY Catcher, Inc.; Cornell National Center for Supercomputing.
For many years, he served as an advocate for the disabled. He was appointed to multiple commissions by the Governor of NY. One year he acted as President of the NYS Coalition of Persons with Disabilities.
Over the years he has published in many obscure areas: supersonic flow are shock waves; torsion; chronobiology; author identification in linguistics, alliteration in poetry,.
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