#TradingPairs101 **Trading Pairs 101: A Quick Guide**

Trading pairs (or "pair trading") is a market-neutral strategy that involves buying one asset while shorting another correlated asset, aiming to profit from their price divergence. For example, if two stocks (like Coca-Cola and Pepsi) usually move together but temporarily diverge, you might buy the underperformer and short the outperformer, betting they’ll converge again.

**Key Steps:**

1. **Pick Correlated Assets** – Choose two historically linked securities (stocks, ETFs, or cryptocurrencies).

2. **Calculate Spread** – Track the price difference (ratio or spread).

3. **Enter/Exit** – Trade when the spread deviates from the norm and close when it reverts.

**Pros:**

- Reduces market risk (hedged position).

- Works in sideways or volatile markets.

**Cons:**

- Correlation can break.

- Requires monitoring.

Best for disciplined traders comfortable with stats and hedging! #TradingTips