CANDIDATE QUALIFICATION FUNNEL AND REJECTION PROTOCOL
Every published card must independently survive four sequential elimination gates—Liquidity, Catalysts, Structural Traps, and Geometry—before entering the morning briefing or intraday candidate queue.
Applies to morning universe ingestion at 8:35 AM ET, independent 15-minute intraday scans through 2:00 PM ET, and real-time candidate rejection tallies published on the homepage feed.
Four morning survival gates
Every morning at 8:35 AM ET, the ingestion pipeline constructs a pre-market candidate pool of 80–120 equities across four data streams: S&P 500 / NASDAQ-100 high-liquidity leaders, SEC Form 4 insider cluster buys, SEC Form 8-K material disclosures, and Olyth retail momentum velocity rankings. Each candidate must clear four strict elimination gates in sequence:
Filters out illiquid symbols and wide execution spreads. Core leaders require $50M+ 20-day average daily dollar volume (ADV); event-driven candidates require a $2M+ baseline floor. Equities below $5.00, unconfirmed bid-ask spreads, or active exchange regulatory halts are immediately disqualified.
Demands verifiable fundamental or quantitative provenance. Candidates must present SEC Form 4 open-market cluster purchases filed within 72 hours, Form 8-K material disclosures filed within 48 hours, or top-tier Olyth 24h heat and 2h momentum velocity with relative volume (RVOL) ≥ 2.0×.
Audits SEC EDGAR filings for toxic financing traps: active S-3 shelf registrations with immediate dilution capacity, recent reverse stock splits, warrants, and overhead parabolic gap exhaustion. Any candidate triggering a critical trap severity is dropped immediately.
Calculates deterministic trade levels. The distance from the trigger to Target 1 divided by the distance to the invalidation stop must equal or exceed 2.5R. If overhead resistance or stop placement compresses planned reward below 1:2.5, the candidate is rejected.
A candidate that fails any single gate is rejected immediately without proceeding to subsequent stages. Surviving setups are sorted by their composite Edge Score, and up to five top-ranking setups are selected for morning publication.
Homepage rejection tallies and audit transparency
Transparency requires accounting for what the engine rejected, not just what it published. The live terminal header publishes the complete elimination tally under the rejectionSummary ledger:
Illiquidity, penny stocks (<$5), unconfirmed spreads, exchange halts.
Insufficient RVOL, absent regulatory filings, stale narrative.
S-3 shelf dilution traps, reverse splits, toxic debt structures.
Failed 1:2.5 minimum R/R geometry, stop buffer noise.
To safeguard against data anomalies, the engine runs an automated Concentration Alert. If a single rejection reason accounts for 40% or more of the initial universe, the system flags a provider-level data regression rather than genuine market illiquidity, alerting engineers to verify feed health before publication.
Intraday five-stage qualification differences
The Intraday Discovery Engine evaluates live regular-session tape data across a specialized five-stage qualification lifecycle:
| INTRADAY STAGE | QUALIFICATION CRITERIA | FAILURE DISPOSITION |
|---|---|---|
| DATA_LIQUIDITY | Real-time tape liquidity, minimum price, verified exchange quote freshness. | Dropped; candidate recorded in scan audit record. |
| MOMENTUM_STRUCTURE | Clean support holding above session VWAP, 15-minute Opening Range breakout. | Candidate enters 30-minute retry cooldown. |
| TRAPS_SEC | Mid-session SEC filing checks, offering alerts, intraday halt radar. | Hard rejection; locked out from future scans today. |
| SCORE_RR | Minimum Edge Score threshold (55+) and strict 1:2.5 Target 1 R/R geometry. | Dropped; failure reason logged to audit cycle. |
| QUALIFIED | All stages satisfied; published as immutable card (subject to max 5 session cap). | Card published with active 60-minute expiry timer. |
To avoid inflating rejection tallies when candidates oscillate near thresholds across 15-minute intervals, the intraday engine enforces a 30-minute evaluation cooldown (candidateLastEvaluatedAt). Subsequent scan evaluations replace the previous disposition rather than double-counting candidate failures.
The zero-trade outcome discipline
The single most critical risk rule governing the Day Trade Edge qualification funnel is the mandate that publishing zero trades is a successful outcome.
Commercial trading tools frequently suffer from quota bias: they feel compelled to generate daily picks to keep users engaged, forcing borderline candidates through lowered filters on low-conviction days. Day Trade Edge eliminates quotas entirely. Five cards is a maximum ceiling, not a daily requirement.
When market conditions are choppy, catalysts lack institutional conviction, or risk-to-reward ratios fall below 1:2.5, the engine declares NO TRADE / INSUFFICIENT EDGE. Standing down in unfavorable market regimes preserves trading capital for high-probability expansions.
Eliminating low-conviction trades is treated with the same mathematical importance as identifying winners. An empty morning briefing or an intraday session with zero published cards is an intentional institutional defense mechanism.
Frozen vs Changeable Funnel State
Funnel evaluation metrics lock permanently at publication:
| ELEMENT | STATE | RULE |
|---|---|---|
| Morning Rejection Summary | FROZEN | Stage 1–4 reject counters lock permanently at 08:35 AM ET release. |
| Qualified Morning Cards | FROZEN | Selected candidates freeze at 09:25 AM ET pre-bell calibration. |
| Intraday Audit Cycles | CHANGEABLE | Appends newly evaluated cycles every 15 minutes until 02:00 PM ET cutoff. |
What This Page Does Not Cover
Timeline details, morning vs pre-bell calibration, 15-minute rescans, and 60-minute expiry.
Mathematical derivation of trigger levels, invalidation stops, and runner management.
The 0–100 catalyst and volume velocity scoring formula.
Post-market 1-minute execution tape post-mortems and fill rules.
DISCLAIMER: Day Trade Edge is an automated quantitative research and analytical software tool. It is not a registered broker-dealer or investment adviser. Method descriptions outline the operational algorithms applied to published cards. Past performance and historical ledger prints do not guarantee future returns.