EWT // DOLLAR-COST AVERAGING // TVT STRATEGY GUIDE
THEVALUETRADER RESEARCH
HOW-TO GUIDE — JUL 2026
REF: DCA FRAMEWORK
Buying & Dollar-Cost Averaging
A TVT framework for scaling into positions across the wave cycle
Core Philosophy
It's all about controlling risk, emotion, and exposure — and trusting the chart.
MINIMUM PLANNED BUYS3 (not always possible)
BUY #1 — STARTER POSITION0.5–0.618 Fib, or 200D/200W MA
BUY #2 — WAVE 2 / HIGHER LOW0.5–0.618 Fib + MA confluence
BUY #3 — DEEPER PULLBACK / BREAKOUT0.786 Fib, or breakout flip-to-support
GOVERNING RULEPlanned in advance — never FOMO
RESULTLower average, less emotion, more control
φ 01Why Most Investors Fail at DCA
Buying and dollar-cost averaging is not about buying blindly, and not every pullback is an opportunity — that's why it's so important to do our research and never feel rushed. It's all about controlling risk, emotion, and exposure, and trusting the chart. Most investors fail at DCA because they:
- Go all-in too early — this is very typical, and I see way too many new investors doing this
- Add randomly, no plan — just read on X it was a good company, so they bought
- Run out of capital before the pullback completes
φ 02Why I Never Buy in One Entry
Markets Move in Waves
- Markets move in waves, not straight lines
- Even in strong uptrends, pullbacks are normal — we need Wave 2 and Wave 4
One Entry vs. Split Buys
One Entry
Higher Risk
- Increases emotional pressure, causes panic when the price dips further
- Reduces flexibility — can't buy lower
Split Buys
More Control
- Better average prices
- Psychological calm — never panic
- Control over risk — stay in command of every buy
φ 03My Rule: Minimum of 3 Buys
Not Always Possible
This won't always be possible — we can see a bounce stronger than expected, and that's fine.
φ 04Buy #1 — Starter Position
This is opening a new position, not adding to one. It's honestly the hardest buy of the three, and many investors panic if it doesn't turn out to be the exact bottom.
Typical Areas
- Support near the 0.5 or 0.618 Fib from the start of the prior wave cycle
- Support near a key moving average — for example, the 200-day or 200-week MA
φ 05Buy #2 — Higher Low / Wave 2
Typical Areas
- 0.5 or 0.618 Fib from the support level of this impulse wave cycle
- Confluence with a Fib and an MA — for example, the 0.618 Fib and the 200-day MA
This is typically the Wave 2, and where risk vs. reward improves. We also need fear in the market to actually experience a Wave 2.
φ 06Buy #3 — Deeper Pullback, or Breakout
If we see a deeper pullback and support at the 0.786 Fib, we can add again. Alternatively, price breaks above the top of Wave 1 and flips that level to support — we add there instead.
This Buy Must Be
- Planned in advance — never a panic buy, or a panic sell
- Never emotional — not FOMO
Having a plan for when to buy is the most important part of investing. This is never guesswork — it lowers the average, removes FOMO, and protects capital.
DCA is not about being right immediately. We often buy, and the price dips lower before going higher.
Plan your buys, understand support levels — and other people's fear becomes our opportunity.
φ 08TVT DCA Framework — Quick Reference
Buy #1 (Starter)
0.5–0.618 Fib / 200D-200W MA
Buy #2 (Wave 2)
0.5–0.618 Fib + MA confluence
Buy #3 (Deeper/Breakout)
0.786 Fib or breakout flip
This content is for educational purposes only and reflects my personal perspective and experience using Elliott Wave Theory. It is not financial advice, investment advice, or a recommendation to buy or sell any security. All investing involves risk, and you are responsible for your own decisions. Always do your own research.