Unilateral Pairs Trading Indicator

Posted by admin on Jan 25th, 2008 in Free Indicators, Hedge Fund, Pairs Trading, TradeStation | 120 comments

Summary

Based on James Altucher’s book Trade Like a Hedge Fund: 20 Successful Uncorrelated Strategies & Techniques to Winning Profits (Wiley Trading), this useful indicator is great for pairs traders that would like to trade only one side of a pair. I really recommend that you buy James Altuchers book, or at least check it out from the library. His book describes Unilateral Pairs Trading in depth, as well as several other trading techniques for high profits, and just general trading thoughts that are highly refreshing. The download includes 2 indicators and a bonus showme for buy/sell conditions At this time, the indicator is just for TradeStation, but as you all know, I’ll get it into NinjaTrader soon!! NinjaTrader was missing a key function I needed, that I’m having to create by hand.

Screen Shots

Usage

James Altuchers book Trade Like a Hedge Fund: 20 Successful Uncorrelated Strategies & Techniques to Winning Profits (Wiley Trading) was my inspiration for the Unilateral Pairs Trading technique that he outlines in chapter 2. I’ve code up a simple TradeStation ShowMe to indicate buy conditions. You can turn on sell conditions too, but I’ve got some improvements to do on that half, so don’t say I didn’t warn you The idea is that when two pairs are trading that are highly correlated ( I use pairs with a correlation value > .85, but that’s just me) they will shift out of sequence with each other for short bits of time, and statistically they will “re-converge”

And how do I find 2 stocks that are highly correlated like that? Well, I wrote a program to analyze all the stocks, and compile them into a list, and tell me which ones are highly correlated You know, the easy, lazy programmers way!! I used to have it online, but there wasn’t enough interest to keep it going. If I was to get a sudden surge in interest, I’d consider putting it back online again…. I might even make it free!! Just let me know if you prefer online, or a desktop app you run at home.

So now that you have a highly correlated pair, how to you apply it to the Unilateral Pairs Trading technique that James Altucher outlines? Well, basically for a long buy, and the ShowMe takes the work out of it, if the standard deviation of some calculated ratios is less then -1.5 (modifiable to suit your trading style) AND the percent change in price is greater than 2%, then you have a buy signal. On the other hand, if you have 1.5 standard deviations and greater than -2% change, then you have a short sell trading opportunity. There is more to it than that, and James Altuchers book is really great to read for insight into how this, and many other, trading techniques work for hedge fund managers

Downloads

Download Unilateral Pairs Trading Indicator (ELD and Workspace)

The download for Unilateral Pairs Trading is broken.

Happy Trading!

Tags: Hedge Fund, James Altucher, P, Pairs Trading, U, Unilateral Pairs Trading Indicator

120 Responses to “Unilateral Pairs Trading Indicator”

Crystal Lapuz says:

September 2, 2010 at 11:44 pm

The shop I take my machine charges $59 for a mechanical and $89 for a electronic/computerized machine. This is the basic service that will entail cleaning, lubrication and adjusting to factory specs. If their are parts needed, that is additional. Most likely, that is all that is needed for your machine. HTH

Reply
cheap guitars for kids says:

September 2, 2010 at 9:25 pm

Hi. I wanted to thank you for the excellent data you’ve posted on your internet site. I will definitelycome back to check it out again and have subscribedto your RSS feed. Have an excellent day.

Reply
office chairs brisbane says:

September 2, 2010 at 2:44 pm

Bookmarking now cheers, definitely consider a follow up post.

Reply
Merlin Selinger says:

September 2, 2010 at 10:29 am

Hi. I wanted to thank you for the good details you have posted on your web page. I will definitelycome back to check it out again and have subscribedto your RSS feed. Have a fantastic day.

Reply
Katja Puschnik says:

September 1, 2010 at 8:33 am

Because the only way the administration can sell this is by presenting the idea of massive job loss. Now having said that I must also say this. You cannot just talk about those people working in the actual assembly plants. There are also subsidiaries and vendors who supply these plants. The workforces who sell and service the cars. Not to mention any number of businesses unrelated to the actual company who depend on the worker dollars to remain in business. I am against the auto bailout and have been from the start, but your post does not really paint a true picture of the scope of the problem related to possible job loss.

Reply
google page rank says:

September 1, 2010 at 6:40 am

optimizing your website for local queries. In other words, if you stay in South Africa, optimizing your website for traffic originating from South African servers.

Reply
Devora Hillburg says:

September 1, 2010 at 3:43 am

When you get a message about maintenance, try again and If it does not work just wait a few hours. That’s not a problem of yours but a Fb’s technical problem

Reply
Alquiler de Inflables says:

August 31, 2010 at 2:35 am

Excelentes Tips! a ponerlos en practica! Gracias!

Reply
Marge Affronti says:

August 30, 2010 at 5:13 pm

I believe the information layed out within the subject is actually very useful. I have been participating in a basic research regarding the matter and your post truly clarified a number of questions I had. I am writing an essay and term paper for my English class and presently browsing plenty of blogs and forums to review.

Reply
office furniture brisbane says:

August 29, 2010 at 4:31 am

Yikes this definitely takes me back, a good fast read.

Reply