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Market Neutral Strategy
Market neutral strategies are
especially suitable for today’s highly volatile and uncertain market environment. In
the following, we introduce a market neutral relative value trading strategy that
consistently generates attractive returns with relatively small risks. According to our
extensive statistical analyses and historical tests, the strategy can produce a yearly
return of 60% +- 17%. A real time trading system has been developed that can provide
up-to-the-minute equity trading buy/sell signals. We call this system the Smart
Trader 60.
Convergence Pairtrade
AASTOCKS.comuses powerful computer programs to search the market every
ten minutes for all possible convergence Pairtrade opportunities by using the
Smart Trader 60 System:
We then post our findings live on the Internet. Each Pairtrade pick specifies the
stocks to buy and stocks to
short
by an exact number of shares. Figure 27 shows an example of AASTOCKS.com's
Convergence Pairtrade Pick:
Figure 27. Convergence pairtrade pick by AASTOCKS.com
This trade longs 1000 shares of GM and shorts 1563 shares of ANDW. (Shares
can be adjusted up or down proportionally in accord with current market prices.)
Then, one should take the following steps:
(1) Cut losses if the trade loses $2790.
(2) Take profits if the trade makes $4450 or more.
(3) Get out of the trade if it makes half the target profit ($2225) and then drops
back to $0.
(4) Always get out after five days.
Rule number three of the Convergence Pairtrade model is that famous advice,
"Never Let a Winner Turn a Loser," a rule observed by most professional traders.
According to AASTOCKS's extensive historical tests and actual trading experience,
these four strategies can go a long way in helping you optimize your profit
potential and minimize your risk!
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