Nasdaq HUGE Selloff 99% Of Components Lower European Crisis Fears Slammed US Stocks

by David Jenyns on November 10, 2011

www.StockMarketFunding.com Nasdaq HUGE Selloff 99% Of Components Lower European Crisis Fears Slammed US Stocks. Also watch S&P 500 Index 99% Of Components Lower European Crisis Fears Slammed US Stocks. www.youtube.com Dow Jones Index Lower European Crisis Fears Slammed US Stocks www.youtu…
Video Rating: 5 / 5

www.guerillastocktrading.com I have got oodles of interest on my pair trading article and the play I entered in both Apple and Research In Motion. I went long Apple and short Research In Motion. The approach of matching a long position with a short position in two stocks of the same sector is called pair trading. This forms a hedge against the sector and the general market that the two stocks are in. The hedge created is essentially a gamble that you are placing on the two stocks; the stock you are long in against the stock you are short in. As its name suggests, a pair trading line of attack is a double-pronged method, where two apparently unrelated option or stock positions are opened simultaneously. The tactic can give somewhat of a safety net to defend against an unexpected move in a certain sector, while capitalizing on a specific equity’s relative-strength backdrop. In effect, a pair trader hedges his or her bets, opening positions in two interrelated equities or indexes and working them against one another, choosing 1 call (bullish) position and 1 put (bearish) position. The duo of positions then collectively gives money-making returns amid a number of outcomes. For instance, I had a great point of view regarding Apple, but a pessimistic sentiment concerning Research In Motion. I went long on Apple whereas I shorted Research In Motion. I also had an uneasy sentiment concerning the entire technology sector. By taking a short position in Research In Motion, it
Video Rating: 4 / 5

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StockTradingMaster November 10, 2011 at 11:45 am

@jetpilot123jkh Seriously man, you’re that stupid? If you go long one, and you short the other, and your long goes up while your short goes down at the same time then you make 19%. You got 2 f*cking different positions, one you made 12% in, and the other you made 7% in. You don’t f*cking divide it by 2. You’re banned from my channel just because you’re so stupid.

jetpilot123jkh November 10, 2011 at 11:46 am

Making 12% on Apple, and 7% on RIM does not yield 19%. It yields (12%+7%)/2 = 9.5%, as long as you invested the same amount in each position.

StockTradingMaster November 10, 2011 at 11:50 am

Thumbs up for the effort you put in to produce this video

StockTradingMaster November 10, 2011 at 12:12 pm

@thobbit60 Correct so you pick a strong stock to go long in the sector near the top in terms of YTD performace with good earnings growth, and a weak stock to short in the sector near the bottom that has missed earnings expectations and is in serious trouble.

thobbit60 November 10, 2011 at 12:33 pm

The trick is to pick the right stocks to go long and short in the same sector, right? I am nervous about picking the wrong stocks for each position and having double the disaster.

Tadek59 November 10, 2011 at 12:55 pm

The excellent and interesting video !

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