#TradingPairs101 The "pairs trading" is a market-neutral investment strategy, where one simultaneously buys and sells two correlated assets, betting that their prices will eventually converge.

What is pairs trading?

Market neutrality:

The goal is not to predict the direction of the market, but rather the convergence of prices of two assets.

Correlation:

The aim is to identify assets whose price relationship tends to be stable, but which may experience temporary deviations.

Price difference:

A long position (buy) is opened in one asset and a short position (sell) in another, taking advantage of the price difference between them.

Convergence:

It is expected that, over time, the prices of the assets will return to their normal relationship, allowing for the closing of positions and profit realization.