Once Pair Trading Station generated all the necessary statistics, Pair Trading Station will display buy and sell signals in your chart. Note that Pair Trading Station will show the signals from all the currency pairs in your market watch in one chart. Therefore you can monitor signals from 100 different currency pairs. You can get 3 type of signals including medium strength, high strength and extreme strength signals.
How to trade using this signal is straight forwards. There are three ways of using our Pair Trading Station in profitable way. Firstly, you can trade according to the entry signal given from Pair Trading Station. Secondly, you can avoid trading against the signal given from Pair Trading Station if you have your own trading strategy. The signal generated from Pair trading station is very similar to economic force monitored by Professional Economist or such big spread between highly correlated pairs could possibly highlighted in the main headline on the Economic news. Therefore, it is not wise to trade against the signal given from Pair Trading Station. Thirdly you can use your own trading strategy as a primary decision making tool and then you can use the intermarket knowledge from Pair Trading station on top.
If you are trading according to the signal from Pair Trading Station, then you should perform both buy and sell at the same time according to the recommendation given from Pair Trading Station to get hedging effects. The lot size for each currency pairs is also specified under the columns named Lot Mult1 and Lot Mult2. To perform pair trading, you just need to multiply this lot size to the amount of lot you want to open. Due to hedging, you don’t have to put stop loss or take profit target. Your take profit target and stop loss target is actually based on dollar value or percent value of your equity or spread and not based on pip values. So you will hold the two pairs buy and sell position until your position have target profit or target loss or spread is filled up.
If you want to use Pair Trading Station as your own macroeconomic indicators or intermarket analysis tool, this is also fine. As described before, the ways of calculating spread and their relationship is very much similar to analysis carried by professional economist. One piece of advice is that do not trade against the signals from Pair Trading Station. If possible, try to trade the same direction as Pair Trading Station.
If you want to use your own trading strategy and you want to use Pair Trading Station to improve your trading strategy, this is also good reason to have Pair Trading Station. You will see that the aggregated signal will alerts you the weakness or strength of particular currency pairs you are watching. In this case, you can just perform buy or sell according to the signal from your trading strategy when Pair Trading Station give you the same directional advice to your trading Strategy.