Pair Trade Finder Review – A Unique Trading Tool

About PairTradeFinder

PairTradeFinder is a software designed to help traders identify candidate stocks for pair trading, in which traders place a bullish bet on an underperforming stock and short an overperforming stock in the same sector. Given that pair trading is a relatively niche trading strategy, this is one of the few tools available to pair traders.

However, the functionality of the tool is highly limited and it offers few of the intuitive, visual tools that many traders have come to expect from paid software. Thus, PairTradeFinder is best for beginning pair traders who do not have the resources or technical expertise to conduct their own, custom pair trading analyses.

PairTradeFinder Pricing Options

PairTradeFinder is a subscription service that costs $49.99 per month or $499 for a lifetime subscription. The company offers a 15-day free trial and a 30-day money-back guarantee (minus a 10% service fee).
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What PairTradeFinder Offers

Automatic Pair Identification & Watchlists

The main interface of PairTradeFinder, and the one likely to be most helpful to pair traders, is the watchlist page. Here, traders can have PairTradeFinder auto-search for potentially paired stocks using several historical stock data. When auto-searching, traders can specify the length of historical data to search through as well as apply other generic filters. However, searches are not limited according to fundamental data or industry sectors.

After loading detected pairs, all stock pairs are automatically entered into a watchlist that can be further customized and subdivided into further groups or watchlists. The watchlist pages are organized much like an Excel spreadsheet, with some visual cues to highlight the correlation ratio between two stocks to traders. The spreadsheet also displays information about the cointegration and volatility of each pair of stocks.

Pair Charts

Another extremely useful function for conducting basic research on stock pairs is the automatic pair charts that PairTradeFinder creates. These can be accessed for any pair in a watchlist and display (1) the over-under for a stock pair relative to the calculated mean over time; (2) the correlation of that pair over time; (3) the price ratio of that pair over time; and (4) the RSI of that pair over time. You can also create a separate chart co-plotting the price of each stock in the pair over time.

However, the versatility of these charts is somewhat limited. Only those five charts are available, and the only customization that can be made is the length of time that is charted. It is not possible to zoom in on charts, although traders can expand a single chart to fill the entire screen for more detail. In addition, although the chart data is also offered in tabular form, this data cannot be exported to Excel for customized plotting.

Backtests

In addition to charting and showing correlation through time, PairTradeFinder allows traders to backtest the relationship between two stocks up to three years in the past. The results for these backtests can be difficult to interpret, largely because of the poor tabular display of the test. However, backtesting does provide useful information about potential profit and loss from trading on that pair, the average correlation through time, and the average profit from winning trades and the average loss from losing trades. Thankfully, backtest data can be easily exported to Excel for easier viewing and interpretation.

PairTradeFinder Platform and Interface

While PairTradeFinder’s interface looks more like Microsoft Excel 2000 than any modern trading software, the interface is not difficult to use. In fact, the spreadsheet-style format is intuitive since most traders are already familiar with working in Excel, and many of the same functions – including filtering and sorting – are found in PairTradeFinder.

In addition, the menu is simplistic, with all options shown across the top of the screen. Windows can be kept open as tabs, so it’s possible to review multiple pair trades or backtests without losing track of work.

That said, PairTradeFinder’s interface does have some serious setbacks. The most noticeable of these is that there is almost no way to customize charts beyond the timescale displayed, and traders cannot even zoom in or out on charts once they are displayed.

The reliance on tabular data displays can also make it difficult to find information quickly. While PairTradeFinder does use some visual cues to highlight important data about pairs, this is not enough to call out potentially high-profit pair trades. Worse, most of the tabular information, with the notable exception of backtests, cannot be easily exported to Excel for re-organizing and plotting.

How Does PairTradeFinder Stand Out?

PairTradeFinder is one of the only software tools available to pair traders, so it is well worth pair traders trying out the software. The software does a relatively good job of identifying correlated stock pairs through time, and the backtesting features allow traders to quickly see how trading on any given pair would have played out in recent history.

However, PairTradeFinder on its own does not offer the technical charting features necessary to fully research stock pairs, nor to identify optimal entry and exit points for trading on a stock pair. For that reason, it is best as an idea generation tool rather than as a full-fledged pair trading platform.

Is PairTradeFinder Right for You?

PairTradeFinder is best for pair traders, but more importantly it is best for relatively new pair traders. Established pair traders who have access to historical stock data and custom analysis methods in place to identify stock pairs will generally be better off using their custom solutions rather than switching to PairTradeFinder, as these custom solutions will generally offer more versatility.

For newer pair traders who do not have custom pair scans already developed, PairTradeFinder can be quite useful in generating trade ideas and taking the hard work out of sifting through historical stock data to find correlated stocks. However, even these traders will likely want to eventually build out their own custom pair trading analysis solutions that may or may not be partially based on PairTradeFinder.
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Pros

• Quickly and automatically identifies correlated stocks
• Backtesting of paired stocks up to three years
• Excel-like interface is intuitive and provides easy sorting and grouping
• Some visual cues to identify strongly correlated or highly profitable stock pairs
• Quick comparison charts to track performance of correlated stocks through time

Cons

• Antiquated interface that is heavily reliant on tabular data displays
• Much of the data cannot be easily exported to Excel
• Charts have very limited options and only a select few chart displays are supported