Synopses & Reviews

Publisher Comments:

Pairs tradingand other market-neutral strategieshave been around since the organization of listed markets. Once used only by large institutional investors and hedge funds, this approach has recently been adopted by many individual traders looking to take money out of the markets.

In The Handbook of Pairs Trading, financial professional Douglas Ehrman combines his extensive knowledge and experience within this field to provide you with the tools and techniques necessary to successfully begin managing your own pairs trading portfolio.

Divided into five parts, The Handbook of Pairs Trading explores pairs trading from a variety of angles, each with the joint goal of illustrating both the general tenets of the strategy and presenting the particular approach that Ehrman believes to be superior to all others. In the first three parts, Ehrman explores the elements that make up the trading of equity pairs and the requisite skills that accompany that endeavor. You’ll receive a brief history of this discipline, and then learn about some of the most important features of pairs trading, including market neutrality, arbitrage, and technical analysis. After exploring each of these three major components independently, Ehrman spends time pulling them all togetherthrough Unified Pairs Trading Theoryso you can begin to integrate pairs trading into your own investment or trading style.

While pairs trading is easiest to understand when considering equities, the discussion of options, futures, and currencies in the final two parts gives you an expanded collection of tools by which to manage your portfolio. Here, Ehrman explores the application of Unified Pairs Trading Theory to these alternate asset classes and securities types, and takes you step by step through a series of trade examples across various asset classesto both highlight the nuances of each and to solidify your understanding of the theory.

The Handbook of Pairs Trading clearly explains the theory and practice of this important discipline, and breaks down its strategy so you can gain a firm understanding of the underlying dynamics of pairs trading. Filled with in-depth insight and expert advice, The Handbook of Pairs Trading is a comprehensive resource for those looking to implement this proven and profitable trading strategy.

The Complete Book of Pairs Trading explains both the theory and practice of pairs trading.  It discusses how pairs trading is a subset of a market neutral approach an investment philosophy which involves buying and selling related securities in an attempt to profit from the changing price relationship.    The author breaks down the strategy into its component parts, so that the reader gains a bottom-up understanding of the underlying market dynamics of pairs trading, why it is consistently profitable, and how an investor can apply the strategies in their own trading.  The book will cover pairs trading involving stocks, single stock futures, and options on stocks and will provide a comprehensive discussion of pairs trading strategies.

Praise for The Handbook of PAIRS TRADING

The Handbook of Pairs Trading gives you the understanding necessary to unlock opportunities that often present themselves in the stock market but are usually only recognized by some of the most successful technical traders on Wall Street. Utilization of Doug’s system has been instrumental in building our model at Alchemy Research and aiding in the profitability of our clients.

Steven A. Chananya Managing Partner and Institutional Sales Alchemy Research, Gotham Equities, D&S Capital

Doug has outlined a clear roadmap on pairs trading, which can be used as a resource tool for both novices and experienced professionals alike. His attention to detail indicates a clear understanding and strong and controlled approach to the sophisticated trading approach that this book explains. I found the approach to be elegant and entertaining as he married the technical text-type material with the philosophical interludes introducing various chapters.

James F. Hamilton independent market observer and former CBOE market-maker

I enjoyed Doug’s Sherlock Holmes approach as he unraveled each concept and strategy. The Handbook is a valuable resource for the investor, trader, and fund manager while the implementation of these strategies is a necessity in today’s market conditions.

Rob Friesen CEO, PairCo, LLC

The Handbook of Pairs Trading explains both the theory and practice of this discipline. The author breaks down the strategy into its component parts so that the reader can gain a firm understanding of the underlying market dynamics of pairs trading; why it is consistently profitable; and how an investor can apply the strategies in their own trading. This guide covers pairs trading involving stocks, options on stocks, and futures contracts, and explains how it allows readers to profit from the changing price relationship of securities. In addition to its comprehensive discussion on the theories involved, this guide also includes concrete, practical examples that will help readers both assimilate the information and put it into practice.