Dividend Capture Day Trade

Entry Logic

• Exact Entry Trigger: A stock is about to go ex-dividend.
• Confirmation: The stock has a high dividend yield.
• Timeframe: Daily chart for analysis, 1-hour for entry.
• Location Context: Near the pre-dividend price.
• Market Condition: Neutral or bullish market.

Exit Logic

• Profit Target(s): Capture the dividend.
• Scaling Out: Not recommended.
• Trailing Stop: Not recommended.
• Signal Failure: The dividend is canceled.
• Opposite Signal: The stock price drops by more than the dividend amount.
• Time Expiration: The ex-dividend date.
• Momentum Loss: Not applicable.

Stop Loss Structure

• Hard Stop: 2% below the entry price.
• Soft Stop: Not recommended.
• Maximum Dollar Loss: $200 per trade.
• Maximum Percent Loss: 2% of the trade value.
• Structural Stop: Below the pre-dividend price.

Risk Management Framework

• Risk Per Trade: 0.2% of the account.
• Maximum Daily Loss: 0.6% of the account.
• Maximum Weekly Loss: 2% of the account.
• Maximum Drawdown: 8% of the account.
• R:R Requirement: Not applicable.

Position Sizing Model

• Sizing Approach: Fixed dollar amount per trade.
• Volatility Adjustment: Not applicable.
• Conviction Sizing: Not applicable.
• Scaling In: Not recommended.
• Scaling Out: Not recommended.

Trade Filtering

• Market Conditions to Avoid: Bearish markets.
• Specific Setups: Only trade stocks with a high dividend yield.
• Instrument Requirements: Stocks with a history of paying dividends.
• Time Restrictions: Not applicable.
• Chop/News Avoidance: Avoid stocks with a lot of negative news.

Context Framework

• Trend Direction: Not applicable.
• VWAP Relationship: Not applicable.
• MA Relationship: Not applicable.
• Range Location: Near the pre-dividend price.
• Higher TF Alignment: Not applicable.

Trade Management Rules

• Breakeven: Not applicable.
• Scale Out: Not applicable.
• Add Size: Not applicable.
• Fast vs Slow Moves: Not applicable.

Time Rules

• Optimal Window: The day before the ex-dividend date.
• Times to Avoid: Not applicable.
• Session Notes: Not applicable.

Setup Classification

• A+ Criteria: All conditions met, high dividend yield.
• A Criteria: All conditions met.
• B Criteria: Missing one condition.
• C Criteria: Missing more than one condition.

Market Selection Criteria

• Instruments: Stocks.
• Volume: High trading volume.
• Volatility: Low volatility.

Statistical Edge Metrics

• Win Rate: 90-95%.
• Avg Win: The dividend amount.
• Avg Loss: 1-2%.
• Profit Factor: High.
• Expectancy: Positive.

Failure Conditions

• Market Conditions: Fails if the stock price drops by more than the dividend amount.
• Specific Scenarios: Fails if the dividend is canceled.

Psychological Rules

• Mental Discipline: This is a mechanical strategy. Stick to the rules.

Advanced Components

• Regime Detection: Not applicable.
• Filters: Filter for stocks with a history of their price recovering quickly after the ex-dividend date.
• Correlation: Not applicable.
• MTF Alignment: Not applicable.

Location

• Where Strongest: In a market with a lot of high-dividend stocks.
• Where Weakest: In a market with few high-dividend stocks.