How To Use A Pairs Trading Strategy With ETFs

Pairs trading is a dynamic trading strategy any ETF trader can add to their playbook. Some traders use the strategy during volatile market conditions in an attempt to control risk; others use it because they favor one investment over another but realize they could be wrong and want to hedge their bet; and others use it simply when they don’t know whether to go long or short. With a basic understanding of pairs trading, you control risk but can still reap a profit. With so many asset classes, sectors, countries and indexes available for trade, ETFs provide excellent pair trading candidates, but only if you know what to do [Download 101 ETF Lessons Every Financial Advisor Should Learn]. Pairs Trading 101 Pairs trading often involves trading two highly correlated assets. For example, the Dow Jones Industrial Average and the S&P 500 indexes typically move together, and have a high correlation. Pairs traders [...] Click here to read the original article on ETFdb.com. Related Posts: Brief History Of ETFs Least Correlated Country ETFs To S&P 500 5 Things To Watch Out For In International Equity ETFs The 5 Most Important Chart Patterns For ETF Traders ETF Insider: Buying Opportunities After Panic Selling