Pair Trading - When to Exit?

[TheBramble]

If you're in a pair trade - and you exit one of the pair because target is hit or stop-loss is hit - what do you do with the remaining side of the pair?

 

[Grey1]

No you do not ,

You close both pos at the same time otherwise you have defeated the object of creating market neutral situation .

Regards

 

[Grey1]

The stoploss will be the net stop for both postions and we close both postions if the net stop is met..


regards

 

[TheBramble]

So, if (for instance) the Long is powering up toward its vwap target and the short is doing nothing much at all, we exit both positions when the Long target (vwap) is hit?

Similarly, if the Long isn't doing much at all and the short hits its stop-loss - we exit both?

 

[Grey1]

agree, however you wil notice that the net movement of stocks will result in a cash positive situation ..

regards