What is QuantPairsTrader?
QuantPairsTrader is a trading platform that is designed on the principles of market neutral trading, trading in pairs. The platform helps the trader select trades, enter and exit trades and calculate risk.
QuantPairsTrader can run in full or semi-automatic mode where positions are entered and exited according to a predefined set of parameters.
QuantPairsTrader was designed to trade FX and Equities. FX market is the most liquid market in the world which makes it is less subject to market manipulation.
Trading FX in pairs, means that going long in one FX and short in another FX. This is not market neutral because of the macro effects on the various FX. To give an example, going long commodity dollars crosses like AUD, NZD, CAD will expose the position to bullish market sentiment, but going long AUD and short CAD will reduce the market risk (movements in the SP 500 index).
How does it work?
Pairs trading is the simplest possible example of employing a market neutral strategy. It involves trading securities in pairs comprised of a long position in one security and a short position in the other. The purpose is to reduce the market risk in the combined trade.
The system uses statistical arbitrage to identify mean-reversion possibilities. This means that using heavy computations on a large amount of securities, the system can in real time identify trading opportunities that have a high likelihood of being profitable.