Darvas and shorting

[snooptrader]

Quote from Kicking:

do you know anyone who became filthy rich shorting ?

Yes, I do. As part of an overall strategy.

Quote from Kicking:

he got wiped out a few times just on one or two shorts

Sounds like poor money management. Money management rules apply the same to shorts as to longs, so there really should be no greater risk.

Maybe that is why you are so worked up about shorting - you obviously did it wrong. Could it be you did not employ proper money management and stops? If so, I doubt you are very successful on the long side, either.

 

[mhashe]

Quote from vetten:

Darvas explains his box strategy in a couple of books.

His strategy works mainly in a bull market and he tries to find stocks, which shoot for the moon.

the criteria he looks for in a stock before he would buy are:

1. price of the stock is an all-time high
2. markedly increase in volume
3. actively bouncing up and down in the top box
4. present price at least 2 times low for the year
5. stock in dynamic industry
6. expectation of increased earnings

I like his way of trading of the medium/longer-term trend.

Now I read somewhere that Darvas didn`t like shorting, but I dont know the reason.

In a bear market Darvas` way of trading becomes less relevant
and I wonder what he would look for if Darvas had to short.

Would he short when the stock goes down through the bottom of the top box or would he wait longer for the trend to confirm?

Or would he wait until the price of the stock trades under the year`s low, but losing out on a lot of profit if he would wait that long?

What other conditions would have to be met before he would short a stock?

Your thoughts on this subject would be much appreciated.

have a primo day

Whatever happened to Darvas? Anyone know or have links to an update as to his current situation.

 

[spect8or]

In a bear market Darvas` way of trading becomes less relevant
and I wonder what he would look for if Darvas had to short.

No one ever has to short stocks. The smart players wait until conditions are ripe for going long again. The ones that read the trading books and listen to ET pundits think they have to be able to short as easily as they go long.

Might sound stupid, but as they say, not even bears make money in bear markets.

(This refers to trading stocks with holding periods of longer than a couple of days. If you're daytrading or trading futures, it doesn't really apply.)

 

[vetten]

thanks everybody for your replies

kicking/flytiger/spect8or

I agree with you that most money is made going long.
the market is going up over time and generally wont go back
to where it started.
also when the bubble bursts, most times the decline can be
over very quickly.

but for high flying individual companies the bubble can burst any time (TASR), maybe Google now?
so I like to prepare myself for that kind of companies as well, apart from going long on others.

so newtoet and snooptrader and maybe even the others could look at my story again and tell me where they would step in and which conditions would have to be met?

thanks for your help and have a primo day

mhashe: Darvas died in 1979 in Paris

 

[TradeCobalt]

My Trading goal:

Make money in all market environments. That is the goal of the "Traders" I know that are true professional traders. The vehicle means nothing, just the range of price action and edge that one can get by having the plan developed to trade all market that offer opportunity.

I have come across many traders who made good money and are now out of work and back to the 9 to 5 job because they could not adjust to the environment.

Index futures, commodities , options, bond futures .....whatever offers price action that has range and low slippage. Open your eyes and adjust to each environment.

TC