can someone explain to me how do i use this technique in a memory palace
You would use a memory palace to store all of the letters. But this method seems very weak. It is easy to recall what the letters mean at the time you do this since you just looked at the sentences. But what happens when you store the letters in a palace and try to recall what the letters mean days later? Your mind is not primed from the sentences anymore.
Those letters can mean any words now because there really wasn’t a connection between the letters and the words. It is kind of like acronyms. You can have these letters that represent the words but if there is no connection between the acronyms and the actual words, you will just have the letters. NATO, ABS, DARE, or DOA. If you don’t have a reference where these acronyms come from, the letters can be anything.
This type of technique is fine for quick and short term memorization(i.e, an actor trying to remember his script). But this technique is not very effective for long term memorization! Like @Parkouristx said, you won’t have a reference where these acronyms come from!