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Stockpair Review


Pair Trading is a simple and direct way to trade in relative performance of stocks and profit by predicting which stock within a given stock pair will perform better (e.g. the pair Google vs.Yahoo). If you selected the better performer you will receive a payout. You can profit even when the market goes down, because only the relative performance between stocks matters.

Think back to 2009, just after the credit crisis. Markets are in a complete panic, the S&P is brushing 600, intraday moves of 5%+ are the norm. You look at AAPL, down more than 50% from its peak, and realize that it is a fantastic buy at this price. However, you are afraid of the meltdown continuing; at this point, there seems to be no bottom to the market. What do you do?

Stockpair Webinars

This is the kind of situation where Stockpair would have provided a great benefit. Instead of going long AAPL naked, you could have bought a Pair Option: you get paid by how much AAPL outperforms another stock, let’s say MSFT. You’re no longer tied to the vagaries of the underlying market. You can sleep in peace knowing that if the entire market drops 10% the next day, you will be fine as long as AAPL doesn’t do any worse. Needless to say, being long AAPL and short MSFT since early 2009 would have netted you in excess of 400% returns in just 2 years!

Stockpair is unique in providing Pair Options for you to diversify your trading style.

There are two main types of pair options offered: fixed or floating. Fixed options lock you in to the trade for a certain period of time; floating options allow you to close out early.

On the left, you choose the pair that you want to trade. The major US stocks are well represented. There are also a few from Europe. Indices allows you to trade a stock versus an index (e.g. AAPL vs NASDAQ), and Commodities currently has only Oil vs Gas and Gold vs Silver.
In the middle, you get to see a graph of recent performance of the two stocks. You choose from the dropdown how long a period you want to bet on (there is a wide range of options, from 5 minutes to 150 days). Because this is a fixed option, performance always starts at 0% and the start time of the option is always ‘Now’ (i.e. outperformance is measured from time of inception of the trade) .

Above, 82% represents that for a bet of $100 you receive $82 if your choice of stock is correct in outperformance.

Let’s compare to the interface for floating options.

Here you have 3 choices for option length: daily, weekly or monthly. Performance is tracked from the start of the period, so above we can see that AAPL is currently ahead of MSFT in today’s performance. This is reflected in the prices offered. If you choose MSFT above at 138% and it ends up coming from behind and outperforming AAPL, you make $138 on $100 investment. If you play safe and bet on AAPL and are right, you make $25 on $100 investment.

With floating options you can however sell your position ahead of the actual expiry time. Thus if MSFT ever gets ahead of AAPL in the day you can cash out your position – you don’t have to wait till the end of the day.

There are a couple of nice tools provided to help you make your decision. You can see a sentiment chart which presumably gives you the opinion of other traders in the market, although this is not stated explicity. There’s also a very useful History tab that shows you which stock has been winning recently in a graphical form.

One of the main issues with Stockpair’s platform is that the charting tools are rudimentary. The technical analysis consists of just RSI, SMA, Bollinger Bands and a ratio of the two stocks (the ratio is actually very helpful). There are no other common indicators like Fibonacci, Elliot Waves, or Stochastic Oscillators available.

In addition to pair options which are Stockpair’s unique feature, binary options are also offered on most of the above assets and the major Forex pairs. The interface is very similar and so easy to use. It is great that Stockpair provides an opportunity for all your option trading requirements. However, the spreads on the binary options are quite wide in comparison to other brokerages.

Apart from its core offering, Stockpair provides a decent tutorial for pairs trading, and some strategy suggestions. It also has a VIP system whereby customers who deposit large amounts get extra features and a monthly cash back on volume – this cash back can be significant (up to 3% of monthly volume) if you are a heavy trader.

Overall, Stockpair provides a unique asset class that can only complement your existing trade strategies. It is not the best platform for executing binary options, nor for technical analysis, but its core offering is solid and very customizable. You can trade in a completely new style, with limited risk and no commissions or hidden costs. That makes Stockpair definitely worth your time to look at.


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