We are pleased to announce that we have developed an interface to www.pairtradinglab.com. Even better, the interface is available to AlgoTrader clients for free.
What Is Pairs Trading?
Pairs trading is a well-known market neutral trading strategy, that gives traders the ability to profit from practically any market conditions. Whether conditions reflect an uptrend, downtrend, or sideways movement, traders can take advantage of the current market using pairs trading. This type of strategy is typically categorized as a statistical arbitrage trading strategy.
The strategy works by monitoring the performance of two historically correlated securities. When the correlation between those two securities demonstrate a temporary weakness, a pairs trade could be conducted by shorting the outperforming stock and going long on the underperforming stock. Basically, you are betting that the spread between the two will converge eventually.
Why We Chose to Build an Interface with Pair Trading Lab
Pair Trading Lab offers tools to assist in setting up and backtesting a pairs trading portfolio. Along with a database of more than 10 million pre-analyzed pairs, Pair Trading Lab offers the following:
- Advanced online backtester
- Online cointegration analyzer
- Private repository of backtests, studies, and pairs
- Portfolio organizer and portfolio backtester
How can you benefit from the AlgoTrader – Pair Trading Lab Integration?
With the newly established integration between AlgoTrader and Pair Trading Lab, our customers will be able to take advantage of the capabilities of both systems in combination:
Using Pair Trading Lab you will be able to:
- Create backtests of pairs
- Verify a pair trading idea and inspect the behavior and robustness of pairs
- Test pairs for cointegration
- Search the PTL database of more than 10 million pre-analyzed U.S. market pairs using complex filters
- Create and maintain lists of interesting pairs, rate them, and tag them
- Create, maintain, and backtest portfolios of pair strategies
Using AlgoTrader you will be able to:
- Download selected pairs and/or portfolio of pairs from Pair Trading Lab into AlgoTrader
- Automatically trade downloaded pairs using AlgoTrader
- Test a pair and/or portfolio of pairs using a paper trading account
- Trade pairs through the broker of your choice
- Live monitoring of pair trading portfolio
- Manually close individual pair positions in case of critical market news
- Trade multiple pair portfolios at the same time
- Use a variety of order types and execution algorithms to optimize execution and ensure full exposure on both legs of the pair
- Analyze the live performance of your pairs using data stored in the AlgoTrader database
- Operate the pairs trading strategy using a robust server-side system that is laid out to run 24/7
If you are looking for an easier way to approach pairs trading, our unique collaboration with Pair Trading Lab gives you all the tools you need.