I expect your post to get a copious amount of "thumbs up".The...

I expect your post to get a copious amount of "thumbs up".


The bottom line is this:


Arguably the most popular institutional trade - across all levels - is the Pairs trade.

ie, i will buy $50,000,000 in BHP but short sell a comparable amount in RIO (lets say $50mn too). This way, i betting on a spread. I am betting on BHP outperforming RIO. Thats the trade!

This happens across the board of EVERYTHING: stocks, bonds, currencies, ETF's, indicies...you name it.

Now if you can not short...then not as many investors will go long "naked" (ie, without having short protection too).


TAKE OUT THE SHORT, TAKE OUT THE LONG...