Jump into the final Part of Severin’s Long-Term Stock Market Strategy, Part 3, where he discusses his Weighted Market Structure DCA strategy and how to bring the theories we have learned into practice. Stay informed, trade well!
TIMESTAMPS
00:00 – INTRO
00:46 – UTILITY
Part 3: Bringing the theory into practice.
Dividends are a share of a company's profits that are distributed to its shareholders.
- Owning a stock entitles you to receive a portion of the company’s earnings.
- Passive income.
- Companies pay dividends regularly.
Dividend reinvestments is the practice of reinvested dividends into additional purchases of the underlying stock.
- Way to add to your investment automatically.
- Take advantage of compounding.
- Earning a return on your return.
- The impact can be considerable.
03:08 – IMPLEMENTATION
The Weighted Market Structure DCA strategy is a dynamic approach to investing based on environmental awareness, technical analysis, and strategic allocation adjustments.
- Capitalize on market trends and maximize average entry points by minimizing exposure during bearish trends.
- Utilize technical analysis to make investment decisions and adjust investment amounts based on market conditions.
Stop investing during downtrends.
- Environmental factors prompt a halt in investments during prolonged bearish trends.
- Build cash reserves to invest when the market indicates strength.
- Protective measure to avoid further losses and preserve capital until market conditions stabilize.
Technical Analysis i.
- Identify key support levels and potential entry points during market downtrends.
- Invest larger sums of money when the market reaches those significant levels.
Weighted Market Structure i.
- Focus on larger investments after significant pullbacks and smaller allocations as the market approaches tops.
- The weight of the investment is adjusted dramatically based on the prevailing market structure.
- This aims to maximize entry prices while reducing exposure during bullish phases.
Environmental Considerations.
- Monitor macroeconomic indicators, news events and geopolitical factors.
- Pause investments during prolonged bearish trends.
Technical Analysis ii.
- Utilize TA such as: HTF levels, Volume levels, Supply & Demand Flips, Market Structure changes.
- Invest larger sums of money when the market reaches significant technical support followed by a confirmed change in market structure.
Weighted Market Structure ii.
- Determine appropriate weightings for investments based on the severity of market pullbacks.
- Capitalize on discounted prices and enhance average entry.
- Gradually reduce investment weightings as markets approach overbought conditions.
Advantages of this approach.
- Maximizes average entry point, allowing for potential higher returns when market recover.
- Provides a systematic approach based on market conditions and TA.
- Provides protection during extended bearish trends by halting investments.
Summary.
- This approach is a combination of environmental considerations, technical analysis insights, and a dynamic allocation adjusted to optimize entry points and mitigate risk.
- Pausing investments during downtrends, utilizing TA for informed decision making, and implementing a weighted approach to DCA, we seek to enhance returns of the long term.
🔎 13:33 Example: Weighted Market Structure DCA
30:22 – TIPS & TRICKS
★ Focus on confirmed market structure changes.
★ Block out emotions and do not act on fear of missing out (FOMO).
★ This strategy requires discipline and patience to adhere to the rules and adjust allocations according to market conditions.
31:07 – FINAL THOUGHTS