Equity Pairs Trades for Lower Volatility and Longer Time Frames

Use equity pairs trades to stay in trades longer.

If you are trying to increase your holding time but are scared, you can buy one long and sell another short against it.

Ideas to Test

Look at the strongest equity sectors from a relative strength standpoint. You'd buy the best name long and sell the worst short. You are looking for the long to outperform the short.

This is a relative value trade.

If the market crashes or corrects, the sting of the down move will be offset by the short position.

You have to test these ideas, but this is a creative way to get your testing ideas going.