#TradingPairs101

TradingPairs refers to the pairs trading strategy, a technique used in financial markets to take advantage of the relationship between two correlated assets. The main idea is to identify two financial instruments that have historically shown a stable relationship and to trade them simultaneously.

How does it work?

Pair selection: Two assets with a strong historical correlation are chosen.

Identification of divergences: Analyzing when prices deviate from their usual relationship.

Execution of the trade: Buying the undervalued asset and selling the overvalued one.

Closing the trade: When prices converge again, positions are closed with profits.

This strategy is used in stocks, currencies, and cryptocurrencies, and it allows for risk reduction when trading related assets.