The Handbook of Pairs Trading : Strategies Using Equities, Options, & Futures - Hardcover

Ehrman, Douglas S.

Hardcover

ISBN 10: 0471727075 ISBN 13: 9780471727071

Publisher: Wiley, 2006

Synopsis

Learn both the theory and practice of pairs trading, why it is consistently profitable, and how you can apply the strategies in your own trading with this valuable guide. Author Douglas Ehrman covers pairs trading involving stocks, options on stocks, and futures contracts, and explains how this type of trading allows you to profit from the changing price relationship of securities. In addition to a comprehensive discussion of the theories involved, he also includes practical examples that will to help you put what you've learned into practice.

Douglas S. Ehrman is a hedge fund manager and a leading authority on pairs trading. He is one of the founders and the Chief Executive Officer of AlphAmerica Asset Management LLC in Chicago. He also served as the chief executive officer of AlphAmerica Financial, Inc., the company that operated PairsTrading.com prior to its merger with PairTrader.com.

About this title

From the Inside Flap:

Pairs trading—and other market-neutral strategies—have 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 together—through Unified Pairs Trading Theory—so 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 classes—to 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.

From the Back Cover:

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

About this edition

• Publisher: Wiley
• Publication date: 2006
• ISBN 10: 0471727075
• ISBN 13: 9780471727071
• Binding: Hardcover
• Edition number: 1
• Number of pages: 272