I'm setting up and following a pair trading operation by the method of summing the distances squared (SSD). After determining the best pairs, I have to track the spread between the normalized prices.

Am I noticing something that is bothering me or am I doing it wrong?

When I opened the transaction it is not cash neutral: the long goes, for example, \$26,628.00 and the short goes \$ 29,886.00.

This way it is not a neutral cash trade.

Whatching the Spread between normalized prices, can there be situations where my spread is moving towards the mean(further away from the average) and I have losses?

The fact that my trade didn open as a cash neutral can offer me situation like this? Where I will have to wait until the mean-reverting process complete?

PS: 1)so the spread will depend on the amount of stocks I bought and the size of their prices. That would have influence on the behavior of the spread, right?