Sure, there is opportunity in pairtrading, but you need to know your stocks. You need to know all about short sales as well as when to buy. Plus, you need to know when to exit both of the pairtrades. Having a good app that is a decent pairtrade finder would be very helpful. You need similar stocks to be doing this sort of trading in the first place. You buy both, and it does not really matter which one is growing or declining. You just need to know when to buy and sell. You end up being neutral in your trading but still making money.

It is not for beginners in trading in stocks. Most people get their start in mutual funds. They are relatively stable depending on the fund you invest in. The spread out risk is a real help for beginners. Then people usually go into trading a couple of single company stocks. They might do well and want to expand some of their disposable income into more risky stock trading ventures. They do it because of the potential returns. No, you do not use savings or retirement investments to do this sort of trading. If you are using a good pairtrade finder, you should be using money that you can afford to lose.

If you get a good return, then only reinvest the profit. This way you can never truly lose any money after that. Yes, it is a gamble to trade in the stock market. It takes an educated guess to perform well with single stocks. Mutual funds are a better hedge against failure. Then you have things like pairtrading that can lose money. You have to be in this for the long term game and gain. Don’t use the college fund to begin this type of investing, but if you use disposable income, you might have a lot of fun and net some decent returns.

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