Simple Method to Find the “Right” Five Stocks for PCA Pairs Trader Pro
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Open https://finviz.com/map.ashx?t=sec
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Hover over a stock sector.
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Select the first five stocks (or the second five stocks).
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Backtest and optimize over at least one year. Use a time frame of 15 minutes to 1 hour. One hour is the optimal interval.
Advisor Parameters and Setup Recommendations
Symbol2, Symbol3, Symbol4, Symbol5
Description: Specifies symbols for the second through fifth assets used in the PCA calculation.
Recommendations: Choose assets that are correlated with the primary symbol to achieve a market-neutral position.
MagicNumber
Description: Unique identifier for the trades opened by the advisor.
Recommendations: Use a unique number to avoid conflicts with other advisors.
ATR_Period
Description: Period used to calculate the ATR (Average True Range) indicator.
Recommendations: Keep the default value (14) unless you need to adapt the strategy to changing volatility. Alternatively, increase it up to 200 for more stable, realistic volatility readings.
Window for PCA
Description: Historical lookback period (in bars) used for the PCA calculation.
Recommendations: Choose a value sufficient for calculation stability—typically between 350 and 500 bars. For optimization, use a range of 10 to 500.
UpperBand = Alpha, LowerBand = –Alpha
Description: Thresholds for the Score signal. If the score moves outside the [–Alpha, Alpha] range, the advisor considers entering the market.
Recommendations: Adjust based on signal sensitivity. Higher values reduce entry frequency. For optimization, use a range of 0.1 to 2 with a step of 0.1.
Risk limit in % of Balance
Description: Percentage of account balance at risk, determining total capital allocation per trade.
Recommendations: Set according to your risk tolerance. For example, assign a fixed percentage you’re willing to invest in a pair of instruments. A common guideline is 2%–3% of balance per basket for conservative settings.
TakeProfit in % of Risk
Description: Profit targets (TP) expressed as a percentage of the Risk limit.
Recommendations: Choose TP levels based on your profit goals and acceptable risk.
StopLoss in % of Balance
Description: Loss limits (SL). In PCA pair or basket trading, SL typically equals the default drawdown tolerance for the account. Select a size that matches your risk tolerance. A common recommendation is a maximum drawdown of 15%–20% of the account.
TradingStartHour/TradingStartMinute and TradingEndHour/TradingEndMinute
Description: Defines the trading window during which the advisor may open or close positions under TP/SL rules.
Recommendations: Specify the session hours you want to trade—e.g., from the start of the main session until its close.
Exit positions on TP/SL only during trading hours
Description: Flag determining whether to close positions on TP/SL only within the trading window.
Recommendations: If you need the advisor to respect the trading window even when TP/SL is reached (for example, when trading CFDs, stocks, or ETFs), set this to true. This prevents closing 24/7 products like CFDs outside your defined hours.
BasketRetryAttempts and BasketRetryDelayMS
Description: Controls retry logic for opening and closing orders.
Recommendations: Defaults (e.g., five retries with a 100 ms delay) work for most conditions but can be adjusted for unstable networks or server issues.
General Usage Recommendations
Testing:
Before running on a live account, thoroughly test in the strategy tester and on a demo account. Important: This is a high-precision quantitative algorithm that demands high-quality real data. Optimize and test only on reliable feeds (e.g., Dukascopy) to understand strategy behavior across market conditions.
Monitoring:
The advisor includes built‑in integrity checks and order‑retry mechanisms. Still, periodically review its performance, especially during periods of extreme volatility or broker outages.
Parameter Adaptation:
You can fine‑tune settings to specific market conditions. For example, if volatility rises, consider adjusting the ATR period or total risk (% of balance).
Documentation and Feedback:
Record your observations and parameter adjustments to continuously optimize the strategy. If you encounter logic discrepancies or need assistance, consult the documentation or support resources.
Note: Pair trading is inherently a portfolio approach. Don’t expect large profits from a single pair. It’s more effective to select at least 3–5 pairs and allocate capital according to your risk policy.
By following this guide, you’ll gain a clear understanding of the advisor’s workings, key parameters, and entry/exit logic—empowering you to adapt it to your strategies and achieve market‑neutral hedging with PCA Pairs Trader Pro.
Your future is shaped by what you do today, not tomorrow. If you’re ready to go beyond standard algorithms and explore new risk‑management possibilities, PCA Pairs Trader Pro is the tool you need. Embrace the challenge, invest in your future, and elevate your trading to a new level of professionalism. Don’t wait—get PCA Pairs Trader Pro now and let your trading resonate like never before!