Pairs Trading - an excellent example.
First let me tell you that I am in Frankfurt at the moment covering the World Federation of Exchanges event - the IOMA/IOCA Annual Conference for Global Custodian. There are a number of very interesting sessions that I am really looking forward to hearing. You will be able to read more in future posts and in an article or two for Global Custodian.
However, my laptop has chosen this rather unfortunate time to stop working. As a result I am "moblogging" this post. Mobile blogging means that I am writing this by email, so I don't know how it is going to turn out or appear on the page. Apologies if it ends up looking unprofessional. On the other hand, if it works out, then that was my plan all the way along.
I am often asked about more of the basics behind trading and securities lending. When I came across the following article on Seeking Alpha, I thought it would be a great item to share with you. Real stocks in a real trade are a better way to show a trade than a theoretical example I can give you.
In the example, the writer has given an example of two stocks that are in the same sector and he has gone long one stock and short the other. He refers to another similar trade where both stocks have risen, but his long position has risen more than his short. He has made more money on the long than the short and has been protected against external factors that would in theory apply to both stocks equally.
You can read the article at the following address: http://tinyurl.com/c7kvtq
I hope you find it useful and that the mobile blog works out! Sent from my BlackBerry® wireless device
