Spread / Pair Trading Strategy
Spread trading can be of two types: intra-market and inter-commodity spreads. In the first case traders can open long and short positions on the same underlying asset, while in the second case they can open long and short positions on different market assets which are related to each other, like gold and silver.
In spread trading it’s important to see how related the securities are and not to predict the market movement. It is important to find related trading instruments with a noticeable price gap to keep the positive balance between risk and reward.
