#TradingPairs101

Trading pairs refer to the simultaneous buying and selling of two highly correlated assets, often used in statistical arbitrage strategies. In trading pairs, one asset is bought while the other is sold, aiming to profit from temporary deviations in their historical price relationship. This strategy relies on identifying pairs with strong historical correlations and monitoring their spreads. When the spread diverges from its mean, traders take positions, expecting it to revert. Pairs trading can be applied to stocks, forex, commodities, or cryptocurrencies, requiring continuous monitoring and adjustment to maximize returns and minimize risks. It suits traders seeking market-neutral strategies ¹.