CHAPTER 1 The Nuts and Bolts 1
   What Are Pairs? 1
   How Do Pairs Work? 3
   Who Uses Pairs? 3
   Mindset of Reading This Book 4
CHAPTER 2 Why Fundamental Analysis? 5
   Common Sense 5
   China.com 6
   How Fundamental Analysis Relates to Pairs 8
   CHAPTER 3 Market Basics 9
   Growth and Growth Ratios 12
   Growth, PE, and the PEG Ratio 15
   PE Ratio 15
   PEG Ratio 17
   Tying It All Together 19
CHAPTER 4 Technical Analysis 21
  Candlestick Charting 23
  Hammer Bottoms and Hangman Tops 23
  Doji Star 25
  Shooting Stars 25
  Engulfing Patterns 26
  Support and Resistance 28
  Trend Lines 28
  Moving Averages 30
CHAPTER 5 Technical Analysis Indicators 33
  Stochastics 33
  Chaikin Money Flow Oscillator 35
  On-Balance Volume 36
  Relative Strength Index 36
CHAPTER 6 Basic Pairs Terminology 41
  Understanding the Correlation 41
  Spread, Differential, and Ratio 42
  Spread 43
  Differential 43
  Ratio 43
  Divergence Trading 44
  Convergence Trading 45
CHAPTER 7 Importing Data into Excel 47
CHAPTER 8 Understanding Correlations—Steve Price 51
CHAPTER 9 Correlation Simplified 59
  What Is a Correlation? 59
  Where to Find Correlations 59
  Building a Correlation Using Excel 60
CHAPTER 10 Understanding Stock Correlations in Relation
  to Indices 65
  Why an Index? 65
  What Is Beta? 65
  How to Apply Beta 66
  Where to Find Beta 67
CHAPTER 11 Basic Statistics 69
  Frequency Distribution 69
  Mean/Median/Mode 71
  Mean Deviation 71
  Variance 71
  Standard Deviation 72
CHAPTER 12 Excel and Statistics 75
  Setting Up the Spreadsheet 75
  Average, Median, Mode, and Standard Deviation 77
  Understanding the Present Data 80
  How Do You Know Which Stock to Buy or Short? 80
  Charting the Data 83
CHAPTER 13 Differential versus Ratio 87
  Differential 87
  Ratio 88
CHAPTER 14 Applying Statistics to Pairs 89
  Density Curve 89
  Understanding the Data 92
CHAPTER 15 Taking a Step Back for a Moment 95
CHAPTER 16 Moving Averages and Normalized
  Standard Deviation 97
  Differential Moving Average 97
  Normalized Standard Deviation 99
CHAPTER 17 Money Management 101
  Why Money Management? 101
  Psychology of Money Management 101
  Understanding How Pairs Can Be Dangerous 103
CHAPTER 18 Money Management II 105
  Fundamental Principles 105
  Know Yourself 106
  The Plan 106
CHAPTER 19 The Reality of Pairs 109
  Do Pairs Really Work? 109
  Trader or Investor? 113
  Making the Style Work for You 113
  Intraday Pairs 115
CHAPTER 20 Trading an Actual Pair 119
  Introduction 119
  Trading Diary—The Beginning 120
  Historical Time Line of Divergence Events 122
CHAPTER 21 The Current Setup 133
  Understanding Where the Pair Is Now 133
  Fundamentals 133
  Earnings 134
  Technical Analysis 135
  Statistics 137
  Summary 137
CHAPTER 22 Trading Diary 143
CHAPTER 23 Correlating Stocks to Indices 187
  General Electric and ExxonMobil 187
  General Electric and the DIAMONDS 189
  ExxonMobil and the DIAMONDS 189
  The Three Wise Men 193
CHAPTER 24 Option Basics—Scott P. Evans 195
CHAPTER 25 Understanding Volatility 201
  What Is Volatility? 201
  Volatility Position Sizing in Your Spreadsheet 201
  Volatility and the Individual Stock 204
  Weighted Volatility 205
CHAPTER 26 Understanding Volatility and Options 207
  Speed and Option Premium 207
  Option Strategies for Pairs 208
  Calls/Puts 208
  Covered Calls/Puts 208
CHAPTER 27 Using Technical and Fundamental Analysis
  with Pairs 211
  Technical Analysis 212
  Moving Averages 212
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