In today’s Best Practices, Tom and Tony break down pairs trading and run through all a trader needs to know when looking for pairs trades.
The 4 key points they cover are:
- Find correlated underlyings that have had a recent divergence in price
- Find the of each
- Adjust the notional value for
- Find contract ratio to match notionals
Tune in for Tom and Tony’s elaboration of each of the 4 steps!