How does Pairs Trading work? Pair traders will pinpoint a pair of related securities. Then, based on how the prices of these two linked financial assets have historically interacted, the trader will step in. When one asset scores higher than its partner, a Pairs Trader will typically buy into the weaker one and sell the stronger one, holding out for their prices to sync up. As the prices eventually score high and the value of the underperforming asset increases, a Pairs Trader will sell the asset with a rising value and profit.
