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The $100 Experiment: Trying a Monthly Dividend Swing Trade Strategy

By Evih | The $100 Experiment | 3 Jan 2024


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I decided to try a new stock trading strategy, and I'm testing it with just $100, but I'm hoping it'll work out well enough to move more into and keep going. I have my swing trade account as my high risk investment account, then everything else is long term holds. I very rarely get anything that I intend to hold for less than a year, and generally for longer than that. Dividend stocks are something I try to hold on to forever, growth stocks are generally for a few years, things like that. I like the swing trading (a few days to a few weeks), so I set money aside for that without it being the majority of my money. The new strategy I'm trying right now is actually a combination of my dividends and swing trades portfolios.
Well, here's what I'm going to try doing.
I always put most of my trading money (I add 10-20$ every paycheck) straight into dividend stocks because I want to build up the passive income.
However, I do have that swing trade account I was talking about for my high-risk itch. When I make enough off that, I transfer the profits over to dividends, and keep my total amount in there fairly low.
What I've decided to do instead is put $100 into another account.
I'm watching for monthly or quarterly dividend stocks that have an ex-div date within 1-3 days, waiting until the record date, then listing the shares back out for the same as what I bought them for. In my test analysis I ran, it'll usually take between 2 and 5 trading days for the price to recover and let me unload.
Then when that dividend gets paid, I'm planning on investing it into the stock that paid it out, and turning on auto-reinvestment on them.

My thought is if I can make 4-5 trades a month with that $100 and get dividend payouts from each of them, it'll be leveraging my $100 to act like it's $400 or $500. The risk is that it won't be consistent, since I'll always be changing up what I'm holding with that initial $100, and won't be able to say month to month what my dividend income will actually be. If I can do this successfully for a few months, I'm thinking I'll move all my ''high risk'' money into this portfolio and strategy, and end up doing 5-10 at a time worth $200 each, rather than the one at a time worth $100.

My criteria are that:
It's a stock that's announced a dividend payment.
It's ex-div date is within three trading days.
It pays dividends either monthly or quarterly (no special dividends or annual).
It has a minimum of two years of dividend payment history.

I'm not completely convinced it'll work just yet, which is why I'm testing it out with the $100 initial amount first.
I can lose $100 and not break the bank.
I can't lose $1k and shrug it off, though.

I've never really lost money on the stock market, but that's just because I refuse to sell when something is red. I did penny trading about a 2-3 years ago (still do, but not like this). Built $10 into $500 or so in less than a month. Thought I was killing it, then made one bad trade with all of it, and it dropped to about $40. I didn't have the money to keep trading at that point, put a completely arbitrary sell value for it to double my money, and forgot about it. Eventually started doing other trading and still didn't think about it. About two years later it sold and I got nearly $800 back out of it. Technically I beat inflation, but I lost out on a lot of potential with that money by being stupid and tying all of it into a single penny stock on a bull run.

Time beats timing seems to hold true overall. That's sort of my thought with most stocks. The stock market has outperformed inflation by an average of 7.5% a year, if you look at it on a decadal scale. There are better years and worse years, but if you hold it long enough, you're likely to do okay. I just also like being able to pay specific bills with dividends, and want to eventually have 100% of my bills covered by monthly dividend payments, so I'm focusing on that. Have been for the last several years.

I sort by ex-div date and secondarily by dividend yield, then I start looking through from the top of the list and go down until I find one that seems okay with cursory research though a search engine search on the stock, the research page on Fidelity, and information from a third source like the Nasdaq site or yahoo finance or something.
When I say cursory, I mean cursory. I'm checking to make sure the company isn't liquidating assets or under bad press or something random like that, then call it good. I hold until the record date, and relist it for a break even price at that point and wait for it to sell.
I don't need the get quick fast stuff, though, and I don't want to risk my addictive personality to risk with more than I should, so I avoid options trading entirely.
Every time I open a new trading portfolio and put money into it, I have hard limits for what I can and can't do in that portfolio, and I stick to it. Otherwise I'd just think "Hell, if I can risk with this $200 and it goes up 3x in three weeks... why not try that with the $2,000 in this account too?!" and I'd lose everything!

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Evih
Evih

Writer,bookworm, crypto, Finance


The $100 Experiment
The $100 Experiment

I decided to try a new stock trading strategy, and I'm testing it with just $100, but I'm hoping it'll work out well enough to move more into and keep going. I have my swing trade account as my high risk investment account, then everything else is long term holds. I very rarely get anything that I intend to hold for less than a year, and generally for longer than that. Dividend stocks are something I try to hold on to forever, growth stocks are generally for a few years, things like that. I like the swing

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