Trade the relationship between two stocks — not the direction of the market.

No honest vendor can promise you a monthly number — your results turn on the markets you trade, your leverage, your costs and your discipline. What we can do is show you the evidence and let you set your own expectations.

Pairs trading is a cointegration-based, market-neutral strategy: it targets the relationship between two related securities, largely independent of whether the market rises or falls. As context — not a forecast:

• The institutional benchmark. The equity-market-neutral hedge-fund category — funds running exactly this style — returned about 7.4%/yr net of fees over 2021–2025 (Sharpe ~1.3, volatility under 4%). Grossed up for typical fees that’s ~11%/yr, roughly 0.9% per month, at the modest ~1.5× leverage these funds run. (Barclay Hedge EMN Index.)
• Cointegration beats the textbook method. The widely-cited “distance” method loses most of its edge after trading costs. The cointegration approach PTF uses is different: Huck & Afawubo (2015) found cointegration-selected S&P 500 pairs deliver a high, stable and robust return after costs; Chen, Chen & Li document large, significant abnormal returns for equity pairs trading.
• Leverage and the retail edge. Market-neutral books are commonly geared 1.5–3×, and because of small size a retail trader can access smaller, less-liquid pairs that capacity-constrained funds can’t touch.

Our own paper-traded beta portfolio returned 17.4% over its first 7.5 months, at ~1.44× average leverage — about 2.2% per month, or roughly 1.5% per month unlevered (i.e. cointegration alpha, not a leverage artefact). We deliberately don’t annualise that: 7.5 months is an encouraging early signal, not a long-term track record, and live trading may carry frictions that paper trading does not, though IBKR simulated trading is quite accurate.

Taken together, a sensible expectation for a disciplined, cointegration-based, modestly-leveraged approach is on the order of ~1–2% per month over the long haul — emphasis on long haul and disciplined. The real draw is a consistent, low-correlation, risk-adjusted return stream (Sharpe well above the S&P 500’s ~0.66), not any single monthly figure. Expect flat and negative months along the way.

Index figures shown are adjusted to add back assumed fees and/or leverage and are not PairTrade Finder’s own results; academic findings cover specific historical periods and markets. Our paper-traded beta-portfolio result covers a 7.5-month period and is hypothetical — it reflects no real capital, execution, financing or slippage costs, was achieved with hindsight, and a period of this length is not a reliable predictor of long-term performance. Leverage magnifies losses as well as gains. Past performance is not indicative of future results. Trading involves substantial risk of loss and is not suitable for everyone. PairTrade Finder® provides software and education only — not investment advice — and guarantees no outcome.

The ability to use the strategy effectively depends on two critical things: i) conservative position sizing and ii) very low commissions, slippage and margin costs. While you can use a small DMA CFD account of say $2,000 to try out a few trades at $500/leg, unless your commissions are free or $0.50 per trade it's going to be hard to make money and the trade is oversized in our opinion. Our Top 50 USA Stock Pair Stars show average wins of about $600-$700 per trade at $10,000/leg, so that is $30-$35 per trade on $500/leg. And don't forget margin costs if you leverage up. To properly have a go at the strategy, we like to see a $10,000 equity DMA CFD account (or option account in USA) at a very low fee, good execution broker. You can guess our first choice based on with whom PTF UA3 has integrated for data and autotrading. Even with a $10,000 equity account, we would trade that at about $500-$1,000/leg for a standard volatility pair. That position sizing means you can carry about 20-25 open trades (which is a well-diversified pairtrading portfolio if constructed properly). As most pairs do not have a historic Max DD in excess of 20%, a max loss stop loss might be set at $200 or so for $1,000/leg, if one were to use a Max Loss Stop Loss. That stop translates into a potential 2% account equity loss per pair trade, trading at 5:1 leverage. Many US brokers are now offering free commissions. That certainly increases the odds of being a consistently profitable pair trader with a small account, provided execution is high-quality (likely you are paying through excess slippage so we suggest Limit Orders only).

PairTrade Finder® UA3 works across equities, ETFs, futures and FX — up to 133 markets in 35 countries — depending on your data feed (IBKR is the most compresensive). The core pairs methodology (cointegration, mean-reversion) applies to any two correlated, liquid instruments, not just stocks. The one caveat: your data feed determines coverage. Interactive Brokers and IQFeed give you real-time stocks, futures and FX; the free Yahoo! Finance feed is best for equities,and can do FX as well. Most traders start with stock and ETF pairs because they're the easiest to source and short, then expand into futures and FX pairs as they get comfortable.

Yes — PTF generates the signals; your broker holds the account. If your IRA is with Interactive Brokers, PTF connects to it exactly as it would a taxable account, so you can run pairs in a tax-advantaged wrapper. Two practical notes from the broker side, not from us: IRAs can't be margined the way a taxable account can, and shorting the second leg of a pair inside an IRA is restricted at most brokers — which matters because classic pairs trading is long-one/short-the-other. Many IRA traders run the long leg directly and gain the short exposure via inverse ETFs or options instead. Check the specific rules with your broker and tax advisor; account mechanics are theirs, the signals are ours.

This scenario is where pairs trading earns its keep. A market-neutral pair holds a long and an offsetting short, so it's designed to profit from the relationship between two instruments, not the market's direction — which is exactly why hedge funds lean on it in turbulent markets. When the whole market drops, both legs tend to fall together and the spread, not the index, drives your result. That's diversification and a source of return uncorrelated to the market averages. It is not risk-free — pairs can de-correlate and stops still matter — but a crash during your trial is arguably the best time to see why the strategy exists. And the PTF 15-day free trial is paper-trading-friendly: you can watch signals through the volatility without a cent at risk. To see how our beta IBKR paper trading account did through a 19% pullback in the S&P, go to https://pairtradefinder.com/blog/2025/09/

No. PTF is built to run in the background and come to you. Set up your watchlist of optimised pairs and the software monitors them 24/7, pushing real-time signals as on-screen alerts, audio alerts, or email to any address you choose — so you can step away and act only when a pair triggers. If you trade through Interactive Brokers, you can go further and semi or full autotrade, letting signals stage or place orders through Trader Workstation. It's designed for people with day jobs, not screen-watchers.

Standard gives you the full pairs-trading engine — screening, backtesting, optimisation, Watclhist creation and monitoring and real-time signals — everything an individual trader needs to run the strategy end-to-end. Hedge Fund Edition adds additional licence keys, bonus US Stock Pair Stars, early access to new Top 50 vintages, one-on-one coaching sessions with Geoff S.T. Hossie, CMT, our CEO, an onboaring session and priority support (see the product comparison above this section on this page). If you know your way around PTF and pair trading, or learn well from video courses and on-screen tutorials, Standard should suit you fine. If you want one-on-one training, priority access to the best pairs, and faster support, HFE is your bespoke program.

Yes — you can move up to Hedge Fund Edition whenever you're ready, and we credit any remaining time on an annual subscription that you've already paid toward the upgrade so you're never penalised for starting on Standard.

PTF is genuinely global — it's used by traders in over 30 countries, and through Interactive Brokers or IQFeed you can trade equities, ETFs, futures, and FX across 133+ markets in 35 countries, not just US exchanges. The software, the methodology and the data feeds are all international by design. The only things that vary by country are your broker access and local tax treatment, which sit with you and your broker — PTF itself doesn't care where you're sitting.

Interactive Brokers is the integrated broker: PTF connects directly to IBKR for real-time and historic data and semi or full automated trading through Trader Workstation, across most products IBKR offers — at no extra data cost beyond IBKR's own low data rates. However, you don't need IBKR to start: you can learn the software and system on the free Yahoo! Finance feed with no broker at all, or run a professional real-time feed via IQFeed. PTF generates the trading signals on-screen, with audio alerts, and by email to any email address you input. These can then be manually traded at any broker you like, or use a service like Global Autotrading to automate. But to get the full experience — live signals wired straight to order execution — IBKR is the one we have built around. It is the highest rated broker for low-costs and best execution, especially for serious individual traders, both in the US and worldwide.