I'm trying out a new investment strategy.
I figured that DCA meant buying at regular intervals of time. How about buying at regular differences in price?
Let me explain, it works like this. Say you want to set up a portfolio in QQQ. I will buy first round when price drops to 90% from the all-time high ie. QQQ is in correction mode. Further when price drops to 88% from the ATH, buy another round. Similarly, buy when price drops to 86%, 84%, 82%, 80%, ... and so on until 70% of ATH.
I have been trying out this method the last few days. I didn't manage to catch all the levels but below were the levels that I caught:
How big is each round? First you need to know how much cash on hand you want to deploy. Then since there are 11 levels, simply divided the cash by 11. That will be how much you can deploy each round.
Is this better than DCA? I think so, because with DCA, you won't be able to catch the bottom unless you are incredibly lucky. With the above method, you might be able to catch somewhere near the bottom. After all, 70% from ATH is a HUGE drop. The disadvantage of this method with respect to DCA is that you need to do more work, which is you need to monitor the price.
I call this method solo leveling, since you are supposed to catch all the levels.
Let time tell whether this method works or not.
Anyway, based on current market price of QQQ which is 466, I am already in profit ... for now.