Using Scanner

🔍 What the Scanner Does:

• • Automated Analysis: Processes all pairs in your watchlist simultaneously
• • Statistical Screening: Identifies pairs with significant price deviations
• • Opportunity Detection: Finds pairs ready for mean reversion trades
• • Efficiency: Saves hours of manual pair-by-pair analysis

🎯 When to Use Scanner:

• • Daily Screening: Check for new opportunities each trading day
• • Market Volatility: Find pairs affected by market movements
• • Strategy Validation: Test your watchlist for trading readiness
• • Portfolio Management: Monitor existing positions for exit signals

📋 Watchlist Selection:

• • Choose Watchlist: Select from your available watchlists
• • Pair Count: Ensure your watchlist has sufficient pairs (5+ recommended)
• • Data Quality: Verify all pairs have recent price data
• • Strategy Alignment: Use watchlists that match your trading approach

🔧 Scanning Method:

• • Ratio Method: Best for traditional pairs trading with stable relationships
• • OLS Method: Ideal for pairs with changing correlation patterns
• • Kalman Method: Perfect for adaptive, real-time analysis
• • Method Selection: Choose based on your strategy and market conditions

📊 Z-Score Range:

• • Conservative (1.5-2.5): Lower risk, fewer but higher quality signals
• • Moderate (2.0-3.0): Balanced risk-reward, good signal frequency
• • Aggressive (2.5-4.0): Higher risk, more frequent trading opportunities
• • Custom Range: Set your own minimum and maximum thresholds

⏰ Lookback Period:

• • Short-term (20-40 days): Quick signals, higher sensitivity to recent changes
• • Medium-term (40-80 days): Balanced approach, stable statistical measures
• • Long-term (80-120 days): Robust signals, less noise, slower response
• • Market Conditions: Adjust based on current volatility and trend strength

▶️ Execution Steps:

1. 1. Verify all parameters are set correctly
2. 2. Ensure your watchlist has sufficient pairs
3. 3. Click the "Start Scan" button
4. 4. Monitor progress in the progress bar
5. 5. Wait for completion and review results

📊 What Happens During Scan:

• • Data Processing: Historical prices are aligned and normalized
• • Statistical Calculation: Z-scores computed for each pair
• • Filtering: Pairs outside your Z-score range are filtered out
• • Result Compilation: Qualified pairs are ranked and displayed

📋 Result Columns:

• • Pair: Stock symbols (e.g., AAPL ⟷ MSFT)
• • Z-Score: Current deviation from mean (higher = more extreme)
• • Correlation: Historical relationship strength (0.7+ preferred)
• • Half-Life: Mean reversion speed in days
• • Signal: Trading recommendation (LONG/SHORT)

🎯 Trading Signals:

• • LONG Signal: Buy the ratio (Z-score < -2.5, pair is oversold)
• • SHORT Signal: Sell the ratio (Z-score > 2.5, pair is overbought)
• • Signal Strength: Higher absolute Z-score = stronger signal
• • Confirmation: Look for high correlation and reasonable half-life

🔍 Result Analysis:

• • Sort by Z-Score: Focus on highest deviations first
• • Check Correlation: Prefer pairs with correlation > 0.7
• • Evaluate Half-Life: Look for reasonable mean reversion
• • Review Watchlist: Consider your strategy context

⚡ Taking Action:

• • Deep Analysis: Use Pair Analyzer on promising pairs
• • Backtesting: Test strategies on historical data
• • Position Sizing: Determine appropriate trade sizes
• • Risk Management: Set stop losses and profit targets