Wave Chasing

I started really focusing on these when I got back from the beach. Done 26 of them at this point, 21 have had a good outcome, 5 went down. (Yeah, screwed up on a few of these in the beginning.) Even with the 5 down, they’re averaging .79% for an overnight trade, and I’m averaging one of these trades a day.

I am going to continue focusing fairly heavily on these – they’ve worked way too well so far to not give them a decent amount of consideration in my trading strategy. I’ve got a pretty boring screen I use – they have to have a yield of at least 1% (preferably over 2%) and be trading over 50K a day (and not just in large blocks – actual continuous activity throughout the day.)

I set my sell order so I’m looking at 1% inclusive of the dividend. I know they’re not all going to go my way, but so far it’s been very good. Even had one close out with a 3.4% gain. Very nice for an overnight.

Yes, there is the opportunity cost of waiting for that dividend to be paid, but at least the bulk of the capital for the trade is immediately freed up to go to work again. Only downside is that you gotta be at the desk at 3:45 to get that buy in.

I’m not abandoning the other services I use, but damn it is tempting to just run with this.