Well, my one month strategy experiment is complete. About 30 days ago, I embarked on a dividend capture strategy that I didn’t know if it would work or not. I’ve read various accounts of those that talk about what it is, how it works and how you can either “make a ton” or “lose your shirt”, but I really didn’t find anyone that had actually done it.
So, I decided to give it a go.
I decided to trade it in real time in a real account, crossed my fingers and dove in! Actually, I had done some research into it beforehand and it wasn’t done on a “lick and a wish”! I also knew that I wanted to share it with you so you could see what this strategy actually looked like, right before your eyes and updated every day.
It was a lot of fun and I learned a lot. Let’s take a look at the results, a few other numbers, lessons learned and my final thoughts.
*Note: There’s a link to my trading rules and all the portfolio trades I made at the end of this post.
First, the raw results are as follows:
- Total gain/loss from stock purchase = -$4,085.80
- Total captured dividends = $5,671.48
- Gross profit of $1,585.68
- Total number of stocks traded = 36
- Commissions paid 72 (36 stocks x 2 – (in and out)) X $4.95 = $356.40
- Net profit of $1,229.28
- Amount invested per trade = $7,500 (approximately)
- Average number of trades per day = 2.4
- Average $ amount at risk at any one time = 2.4 trades per day X $7,500 = $18,000
- Return on Investment (-ROI-) = $1,229.28/$18,000 = 6.83%
- Number of times I closed a trade before realizing a captured dividend for profit = 4
- Number of times I closed a trade before realizing a captured dividend for a loss = 1
- Average days stock was held in account (including weekends, holidays) = 2.17
- Number of winning/break-even trades = 27
- Number of losing trades = 9
- As of today (6/14/17), the number of stocks that are higher priced today than when originally purchased = 5
I know, that’s a lot of numbers to squeeze into a human brain at any one time. But, they are instructive. Here’s what lessons I learned from this experiment.
- Profit with this strategy IS possible
- Develop and STICK TO trading rules. Many times, I was tempted to buy/sell and my rules told me not to or told me to do something that didn’t “feel” right.
- Make trades unemotionally. Again the rules are a lifesaver and makes trading this strategy (and any other strategy) much easier.
- It only took a few minutes per day to do this. I estimate that I spent about 20-30 minutes per day to execute this strategy because most of the trading happens at or near the open. Of course, there were exceptions but mostly it was fast action. It took much longer to write about everything each day than actually doing it!
- $1,229.28 is a good return based on only $18,000 at risk. The ROI of 6.83% for about 30 days is excellent.
- I like fast action trading and this definitely satisfied that desire. The great thing is that it’s fast for a short amount of time each day and you don’t have to watch your trade screens for long!
- It was fun! This is important to trading because if it’s not at least a little fun, you’ll stop.
My final thoughts.
This was a fun and instructive strategy experiment. Luckily, I did research first and wrote out my trading rules and stuck to them. I realize that there are alternative investing strategies out there and they can work. Of course, I would need to do this on a long-term basis to see if this really works.
Thanks for watching, commenting and taking the time to participate, no matter how that looked. I hope you learned something like I did and it shows that you can try new things and different strategies – if you do your homework.
Please let me know your thoughts!
Until next time, happy trading!
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P.S.S. If you missed the blog post about my 20 rules for dividend capture strategy, here’s a link to it.
P.S.S.S. Here’s the blog post where I gave the link to all my portfolio trades, past, present and future. Here it is again.