PT Recommendations - Logic behind it

[Ravi]

Dear Group Members,

I've been going through Mahender sir's  recommendations and after doing some paper trading, it seems to be working well! However I have couple of questions on how the recommendations are arrived. Request you to go through the following questions and help me understand the recommendations better.

Initiation Condition : After calculating the PR between two stocks, how can we arrive at the initiation condition?

Target and Stop Loss : Once the trade is initiated, how if the target and stop loss determined? What is the logic behind it?

Profit Estimate : How is the profit estimate calculated? Do we have any formula to specifically calculate the profit?

If you could put some light on the above mentioned areas, it would help me to get into real trading quickly.

Regards,
Ravi

[Mahender]

Pls read the pdf for better understanding of Pair Trading.  PDF Source : Unknown/Internet.