Why Should I Use DynaLogic and How Does it Work?

Explaining the "Logic" Behind DynaLogic and How to Effectively Use it in Your Investing Strategy

Welcome aboard! We have built “The Investor’s Compass” Powered by DynaLogic to provide you with a wealth of information on a host of over 330 equities and ETFs. We are focused on taking the emotion out of the investment equation by using a rules-based approach that helps you sell when others are chasing momentum, and helps you buy when things look gloomy. Warren Buffett likes to say “be fearful when others are greedy and greedy when others are fearful. It’s the old “buy low, sell high.” It’s not that hard if you can keep emotions out of the equation.

What is the Investor’s Compass?

“The Investor’s Compass” by DynaLogic uses patented software to track the end-of-day prices of a broad list of equities and ETFs. Our algorithm issues signals whenever a stock or ETF hits a predetermined change in price from the previous execution price. If a security is rising in price, we will issue a sell signal suggesting you take some money off the table. If a security is declining in price, we will issue a buy signal suggesting now may be a good time to add to your position or initiate a position. Additionally, we incorporate The Relative Strength Index (RSI) for each security helping you identify overbought and oversold trends.

This is the basic premise behind our long-term strategic rebalancing offering, which is available to our free subscribers in the form of daily signals alerting you to when we issue buy or sell signals.

In addition to our long-term DynaLogic signals, we recently introduced a premium offering called "Trader's Edge," a new component focused on short-term options trading.

Trader’s Edge

Trader's Edge identifies high probability put and call options trades based on specific criteria, such as securities in DynaLogic Zone 1 or with significantly overbought or oversold RSI readings.

Here's an example of a Trader's Edge signal:

Dell Computer (DELL)

On May 29, 2024, DELL closed at $179.21 with an RSI of 82.96 (Overbought). Following that close, Dell started trading lower.

• On 6/4/24 DELL closed at $135.75 with an RSI of 46.44 and a DynaLogic Zone 1.

• Our recommendation would have been to buy a put option to capture the continuing downtrend.

• We bought out-of-the-money 8/16/24 with $100 strike price.

• On 6/5/24 DELL closed at $137.66 and we added to the put position.

• On 6/7/24 we closed out the trade up 36.1%

• As with any option position proper risk tolerance needs to be an integral part of the transaction.

How to Use Trader's Edge Signals

Trader's Edge signals are designed to help subscribers make informed short-term options trades. However, it's crucial to understand options trading and practice proper risk management before acting on these signals. Always use stop losses to limit your downside risk and never invest more than you can afford to lose.

Access to DynaLogic and Trader's Edge

• Free subscribers will receive daily DynaLogic signals focused on long-term strategic portfolio management and rebalancing.

• Paid subscribers will have access to Trader's Edge signals and additional data on all securities, including current zones and RSI readings.

How does our system work?

For a quick video on how DynaLogic works, see below.

DynaLogic Zone Technology

We assign Zones so subscribers can understand where a stock is relative to historical prices when they receive a signal, and the risk or opportunity for that stock.

For instance, a Zone 4 sell signal with an overbought RSI reading above 70 is saying there has been a significant run-up in the price of an underlying security and there is now “Substantial Downside Risk” to price and the security is in an “overbought” position. If you own the security, this might be a good time to “Take some chips off the table”. Think of it as rebalancing a winner, a necessary part of portfolio management.

Conversely, a Zone 1 Add/Initiate signal with an oversold RSI reading below 30 is saying an underlying security has undergone a significant price decline, there may be “Substantial Upside Price Opportunity” which also means limited downside risk. This may be a great time to add to or initiate a position in a stock you have considered owning.

Understanding Relative Strength Index (RSI)

Relative Strength Indicator (RSI), developed by J. Welles Wilder, is a popular momentum oscillator that is commonly used in technical analysis to identify overbought or oversold conditions in a financial market. It is a range-bound oscillator, typically oscillating between 0 and 100, and is calculated using the average gains and losses over a specified time period.

Overbought and Oversold Levels:

Traditionally, and according to Wilder's original interpretation, an RSI above 70 indicates that a security may be overbought, and an RSI below 30 indicates it may be oversold.

Overbought conditions suggest that the security may be due for a price correction or reversal downward.

Oversold conditions suggest that the security may be due for a price bounce or reversal upward.

Who is “The Investor’s Compass” For?

“The Investor’s Compass” is for any investor looking to achieve better investing results by using tools to manage their emotions and protecting their gains over an extended period by knowing WHEN to sell stocks or initiating or adding to positions during market downdrafts. We believe our information is beneficial both to investors managing long term positions and investors wishing to make short term trades.

Please note that we don't tell you WHAT to own. There are plenty of publications out there that focus on this exclusively. Instead, we help you manage what you own or are considering owning to achieve better outcomes.

The DynaLogic Platform is Built on the Premise That Markets are Volatile

To quote Warren Buffet, “be fearful when others are greedy, and greedy when others are fearful.”

Day-to-day stock prices represent nothing more than buyers and sellers creating supply and demand. As they engage in more buying or selling, prices move up or down, sometimes dramatically. 

Even the most sought-after stocks can have intense corrections and even the most sold-off stocks can suddenly rally in price as new buyers recognize the opportunity. 

Logic says that the best way to profit from market volatility is to sell when markets are rising and buy when they are falling because NO ONE can accurately predict stock prices for any length of time! 

What stocks do we track?

For a full list of the stocks we are currently tracking, please see here. We are continuously adding new stocks to the list and are always open to requests from our paid members to add additional stocks from their portfolio.

We have a ton of case studies of the great results we’ve seen with our system.

There are a number of other case studies on that page and hundreds more we just haven’t yet written out.

Following DynaLogic helps you to minimize risk while still having the greater upside of investing in individual securities. We’re confident that following our system will lead to better investing results in the long run, and we have been confirmed in that by many of our subscribers.

For full access to our signals and Trader’s Edge, upgrade your subscription today and let DynaLogic help you manage your emotions and improve your investing outcomes.

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(Note: DynaLogic provides to subscribers relevant and real time market movement information on a host of equity securities.  Signals (sell or buy) are based solely on mathematical changes in the price of a security.  No other methodology is used.

DynaLogic is not a registered investment advisor, and it makes no representation or recommendation concerning the purchase or sale of any security investment product; DynaLogic provides no advice or recommendation whether a subscriber should or should not act on any signal a subscriber receives, and it has no knowledge whether a subscriber, in fact, acts on a signal or any signal; DynaLogic maintains no portfolio account or other investment information on any subscriber.)