Has anybody ever found any useful 'nuggets' with Darvas' trend following ideas.? I know the Donchian channel system, etc, but Darvas' systematic approach was slightly different. Any ideas?
i don't know if it's nuggets, but in his 1974ish book (he had 2 or 3 followups), he talks about the box method a bit more thoroughly, and talks about shorting via breaking down out of the box...
interesting that you wrote about this. i just started reading his book (the first one) last night, and am only half way through, but here are my impressions so far. i don't see anything spectacular in there at all. buy stocks as they are breaking out of consolidations, and use a stop, then a trailing stop. i noticed that he buys beyond the traditional breakout point, usually by a point or so. pretty simple, but maybe it's keeping it simple that works. my impression is that he got extremely lucky on his first two major winners, that gave him his first 500k, with a buyout for example in one, and some rights thing in another. that said, i will give him credit for two things, his excellent discipline in keeping losers small, and for holding winners for a long, long time. if i come up with anything further as i finish his book (i have the other one also), i'll add to this thread.
dafuggin - his book was quite remarkable for its time. it also went out of print in the 60s or 70s, and used copies would change hands at large amounts of money. when it was published, brokers went into a tizzy; it received major magazine coverage, people who didn't believe darvas could possibly make that much money, and people who didn't want their clients knowing about stops, or putting money after losers, etc. the stuff around it was detailed in his 2nd book (which is think is "wall street - the other las vegas)... i believe o'neil cites it as one of his major influences for CANSLIM...
I have a copy that was printed for the purpose: "Distributed to the trade". This book has a foreword by ARC telling why ARC asked him to write it for them.
interesting. i was going to add you that o'neil's method is based on similar principles and goes into much, much more detail and with many more examples. i'm actually going to reread o'neil when i'm done with darvas. it hasn't been useful in a long long time, but i'd like to get some investment type trades going. seems like a good time for it.
Okay....let's imagine a long trade. ENTRY: Make a box top after no new high has been formed for the last "x" time periods, (you should already have your box bottom formed if the construction of the box top comes second.)Then why not put on half your postion at the period of formation of the box,(this is where there is a slight modification of Darvas entry) and the rest if it blows through the top or if trades in the bottom third of the box. Something like that for entry.??? EXIT: If it goes against you ( in the case of a long trade), you get out when it smashes through the bottom of the box. Maybe you filter this thing with itself.......if you have 2 or more "boxes" stacked in the same direction....that is the trend....so trade in that direction, and use the current box as entry area. I dunno.....just a thought?
Actually You wouldn't be able to trade this on the ES or anything else that is not at an all time high and breaking out of this high... the 52 week high will not due... also, I believe that he looked for a significant increase in voume which to him translated into "interest" in the stock by the well informed. Nick