It's been almost four months since I published the pair trading idea titled 'BABA/BIDU, pair trading opportunity'. I felt great to catch this one and suggest closing the position around 1.15.
From the chart, it's easy to see a sideway pattern has been formed with upper and bottom boundary of 1.20 and 1.05, respectively.
My trading strategy is to buy the pair when it comes to 1.05. As I mentioned in my previous post, 1.5 is my target depending on how strong the momentum is. The basic idea behind this is statistics, central limit theorem that I believe the ratio will go back to its normal range.
Of course, there are other things as well. It's my personal favor of BABA over BIDU. I use Taobao, Tmall, the products of BABA almost everyday. BIDU? probably just use the search engine two to three times per week. I'm not saying that BIDU is not a good company. What I mean is that compare to BABA, BIDU is less competitive in my view(Sorry for BIDU fans, it's my personal feeling).
Admittedly, BABA's price has been hurt a lot by the anti-trust investigation and business uncertainties along the way. But it seems to me that government didn't aim at shutting it down. The fine was just a one-time-off pain. In my opinion, the show must go on. BABA will grow in a lower but stable rate.
That's my projection. Let's see how the pair performs in the future.
Give me a like to support me. Thank you very much.
From the chart, it's easy to see a sideway pattern has been formed with upper and bottom boundary of 1.20 and 1.05, respectively.
My trading strategy is to buy the pair when it comes to 1.05. As I mentioned in my previous post, 1.5 is my target depending on how strong the momentum is. The basic idea behind this is statistics, central limit theorem that I believe the ratio will go back to its normal range.
Of course, there are other things as well. It's my personal favor of BABA over BIDU. I use Taobao, Tmall, the products of BABA almost everyday. BIDU? probably just use the search engine two to three times per week. I'm not saying that BIDU is not a good company. What I mean is that compare to BABA, BIDU is less competitive in my view(Sorry for BIDU fans, it's my personal feeling).
Admittedly, BABA's price has been hurt a lot by the anti-trust investigation and business uncertainties along the way. But it seems to me that government didn't aim at shutting it down. The fine was just a one-time-off pain. In my opinion, the show must go on. BABA will grow in a lower but stable rate.
That's my projection. Let's see how the pair performs in the future.
Give me a like to support me. Thank you very much.
הערה:
The pair gapped up by over 2% today even before retesting the bottom of the sideway zone.
הערה:
It's coming towards the upper zone.
plan your trade and trade your plan
