What is trading couples?
Trading Trading is an investment strategy based on the idea that shares in some companies tend to be closely linked. This is the most common in two companies in the same industry. When both shares move in different directions, a trader of couples will buy and sell on the basis of the assumption that they will eventually move back together.
Investors are carried out by pairs of trading in a wide range of shares. The aim is usually to find two supplies that are affected by a very similar range of factors. One example would be McDonald's and Burger King. Many factors that affect the price of McDonald's shares, such as people who have shorter lunch hours and buy fast food or health fear over hamburgers, will affect King's burger in the same way. For example, McDonald's supplies can suddenly happen much more compared to Burger King. The investor sells McDonalns shares and buy burger king. This is because they believe that anything has caused a price change is probably temporaryFactor and in the long run, the influence of common factors will restore the relationship between shares. That would probably mean McDonald's stocks, Burger King is rising or both.
It is important to realize that shares involved in steam trading may not be at a similar price. In some cases, one stock may be consistently much higher than the other. It depends on the relative position between them is usually the same. This is because they tend to rise or fall at the same time in similar proportions.
More complicated versions of trading with steam is shortening shares that they believe to perform the worst of them. Shorting includes inventory lending from another merchant, selling, and then buying back shares to return the reverse merchant at the agreed date. The intention is to do with shares that you think will be reduced in the price. If this happens, you will take more money from the sale of borrowed stocks,Before you spend the purchase of shares that will return.
In this form of trading with couples, the investor does not have to wait for both shares to drift apart. Instead, one stock will take a long position on the other, which means they buy it with their own funds. This tactic allows you to make money, even if the whole market is falling. This is because the gambling investor is based on the relationship between the two shares, not their real prices. Trading in this way means that the investor earns money when they correctly predict which stocks will work better compared to others.
For this form of trading, couples have some disadvantages. In most cases, investors cannot simply shorten shares through the usual market markets. Instead, it must use a financial tool such as a difference contract or planting contract. This increases the complexity of the agreement. Trading couples also means that you have to pay commission and other business costs twice because there are two different shares, toThe terés can eat into profits.