Market Trend Lab

Today's update of pair trade calls: SBI AND MARUTI : PROFIT 13000+ ITC AND CAIRN: PROFIT 4000 GMRINFRA AND IFCI : PROFIT 5800 FOR DETAIL NOW VISIT OUR SEPARATE BLOG FOR STOCKS : JUST STOCK IDEAS LINK :   http://justbankniftystock.blogspot.in/

Now a days there is too much fluctuation and noise in stock market and hence it becomes difficult to predict the market accurately every time. To survive here one has to trade smart. Smart Trader trades for consistent profit and its very important for survival. For consistent profit one must have strategy. Strategy that gives the acceptable level of confidence. Among the many, One of the strategy is 'Pair Trading'.

Volatility has become the hallmark of financial markets. We see benchmark indices posting decent gains in one trading session and lose those gains in other trading session. In such a scenario, traders and money managers can adopt a market-neutral strategy called pair trading, which is very popular with hedge funds, investment bankers and professional money managers It is market-neutral strategy as its profitability is not dependent on the direction of the market. It yields profits whether market moves up or down, or remains sideways. Also, risk in this strategy is very low. In 1980s Gerald Bamberger popularized this strategy. The strategy monitors performance of two historically correlated securities in same sector or industry. In simple terms pair trading involves buying one stock and simultaneously selling another stock in same industry that follow each other when they diverge from the normal pattern; with the expectation that the normal pattern will soon resume.