In a constant attempt to help our clients to avoid blind trading and to keep it as intelligent as possible, we would like to start a little tradition of posting the basic information and tips about the major trading strategies. We hope that if you are only taking the first steps in discovering the fascinating world of binary options, you’ll find it helpful and interesting, and if you are already a guru, you are welcome to share your own views on the matter.
Being created back in 1980s by the small group of computer scientists, mathematicians and physicists, pairs trading strategy focuses on determining 2 currency pairs with strong historical correlation. Keeping it short, pairs trader monitors performance of both pairs and when one asset starts to move up and another one falls simultaneously, shorts the outperforming asset and longs the underperforming one. In such case, the main profit consists of the spread between them.
Pairs trading brought more than $50 millions to its creators only in the first years and can be considered as one of the most profitable strategies, if you posses the right skills for it. To become successful pairs trader, pay special attention to your position sizing, market timing and decision making skills.
Have you ever tried trading with such strategy? You can always check your trading skills on Ayrex!