Trading Secrets

chapter 13

Playing footsie

As bull market trading strategies go, this one takes some beating. It’s really simple, too. All you have to do is buy shares in the companies that are being relegated from the FTSE 100 on the day that they drop out of the Index following the FTSE International Committee’s Quarterly Index Review, then hold the shares for three months before selling up. Then start the process all over again by reinvesting the proceeds into the next laggards being booted out of the blue-chip Index following the next FTSE Committee’s Quarterly Index Review.

It may be a simple trade, but it’s also one that has reaped hefty gains. In fact, if you had followed this strategy from the beginning of the last equity bull market in March 2003 ...