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The power of pair trading is to find undervalued assets (like SOL) and pair them with overvalued assets (Google) that have run out of upwards momentum. In this case, the target price for the pair is 1.35 over the next 18 months, representing a 4x return (5.38 / 1.35). I swapped at the equivalent of 5.38 today - Google $131 and Solana $24.35.  

There were a lot of questions re this today.  Here are some answers:

  • I made the trade as I saw Google Topping out on IADSS and Mean Reversion. 
  • I saw Solana holding up real strong using the layers model and felt like I posted this at 7am this morning saying SOL was heading to $25.4 - but did not expect it to have an 8% move in 10 hours

  • The pair was looking real juice and the trend was turning down


We will see if the plan works out.

Meta is the next asset I plan on moving. It is rallying hard in after-hours trading up to $320. I will keep you updated on my progress. I am focusing on sharing my thought process and multi-year forecasts well in advance so you can see how I approach the markets and how my long-term swing trading plans shake out.


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Comments

Anonymous

Which brokerage is James using for swapping GOOG into SOL?

Anonymous

I should have bought Meta / Goog but didn't. Buying SOL now - it is the prime Eth competitor and we are moving into a cyclically favorable time period.

Anonymous

Fantastic breakdown, really helpful to understand

Anonymous

wonderful info

Anonymous

Finding this so helpful and this will help us all a lot to avoid some mistakes made in 2021👍🏿 Remember that you are out for trip. Make time for yourself man and safe travels.

Anonymous

THANKS! On this one in practice: Do you sell your google for USD and pay taxes and all, and then trade the USD for SOL again? Or do you need an exchange, where you can pair your google with SOL and do a direct swap, like on BTC Pairs? This is one thing I didn't get a 100%, yet. How to execute a Pair Trade the proper way...

Anonymous

When do you see s and p rolling over?

Anonymous

Regardless of whether an intermediary USD is used for the pair trade, I believe you would still have capital gains/loss tax implications in the US. Not tax advice. :)

Anonymous

Love learning this pair trading but still dont know which platform is best for this option. James which one do you recommend as we dont have this facility in MUR.

Anonymous

co asking, which platform would be good for this, prime XBT?