Using The Darvas System
- Thread starter toby
- Start date
In Darvas's book, he talks about being a Techo-Fundamentalist in that he is looking for stocks that are growth stocks, have increasing earnings, and exhibit the upward box behavior. It seems like he is not advocating strict box usage as is presented in this forum.
For example, you can make a case that GOOG or TASR would have been Darvas candidates because fundamentally there was something different and unique about these companies and they were/are exhibiting hyper-growth.
I realize that original post says "no fundies," but then it seems like your performance will suffer.
For example, you can make a case that GOOG or TASR would have been Darvas candidates because fundamentally there was something different and unique about these companies and they were/are exhibiting hyper-growth.
I realize that original post says "no fundies," but then it seems like your performance will suffer.
hello Toby,
great to see you trading according to Darvas principles
I haven`t been trading like that myself as yet, but I did make quite a study of his way of trading.
I see that you`re returning a profit after 4 years of losses, so thats just great......I`ve been trading for 7 years and not much profit to show, but at least I`m not a loser.
I really want to hit the big time and I see Darvas method as a good way to do this. Find a flying stock and pile all your money in it!
You can see from his books that it took him less than 10 stocks
to hit the $ 2million bucks.
Please allow me to make a few remarks on your trading that might improve it:
You have to use volume in your system: you only want to invest in stocks that have the best chance of going and staying in the next box and that will mostly be achieved by more buyers getting involved
you better be more choosy in your selection and volume will weed out a lot - would be good if volume so far didnt amount to much and is suddenly picking up and stay up
Darvas often would watch a stock for weeks or even months before jumping in
look also at the industry the stock is in: is it dynamic being in the top industries for 1-6 months (you can find this on bigcharts.com)
is the stock lively and bouncing up and down in the top box?
is there an expectation of increased earnings so that more people would get interested in the stock, which will drive up the
price?
did the price penetrate the high of the box on 3 different occasions and falling back in the top box?
when ready to buy the stock, look at the situation of the overall
market and place the order when the market is up for that day
or days
You said your stop loss is 1% below the purchase price, but you said to have losses like 6 and 10%.
I would think that around 75% of those break outs would fail, so a tighter stop loss is paramount. Darvas writes to put the stop loss a fraction under the purchase price, so 10 cents would be better than 1%. Your losses would be minimal and you would be only in stocks that really have a go (another selection of the strongest).
So with a $ 50 all time high stock I would put the trigger price at
$ 50.05 and limit price at $ 50.10.
stop limit at $ 50 with the trigger price at 50.05
very thight, but like I said you only would want the very best
and your losses would be so minimal.
I have a very easy way to scan the stock to find stocks that might be interesting.
I have the following scan in www.moneycentral.com :
last price>$20; last price >0.95x52-week high; average volume last year>100,000; last price >2x52-week low; last price <2.2x52-week low; last volume>1.5xaverage volume last year
I feel that you have your money divided in too many stocks.
Darvas kept watch on about 5-8 stocks and invested his money in only a few at a time and piled it all in one if that became the big winner.
This weekend I will be starting to sort out stocks for real and I keep you posted
Have a primo weekend
great to see you trading according to Darvas principles
I haven`t been trading like that myself as yet, but I did make quite a study of his way of trading.
I see that you`re returning a profit after 4 years of losses, so thats just great......I`ve been trading for 7 years and not much profit to show, but at least I`m not a loser.
I really want to hit the big time and I see Darvas method as a good way to do this. Find a flying stock and pile all your money in it!
You can see from his books that it took him less than 10 stocks
to hit the $ 2million bucks.
Please allow me to make a few remarks on your trading that might improve it:
You have to use volume in your system: you only want to invest in stocks that have the best chance of going and staying in the next box and that will mostly be achieved by more buyers getting involved
you better be more choosy in your selection and volume will weed out a lot - would be good if volume so far didnt amount to much and is suddenly picking up and stay up
Darvas often would watch a stock for weeks or even months before jumping in
look also at the industry the stock is in: is it dynamic being in the top industries for 1-6 months (you can find this on bigcharts.com)
is the stock lively and bouncing up and down in the top box?
is there an expectation of increased earnings so that more people would get interested in the stock, which will drive up the
price?
did the price penetrate the high of the box on 3 different occasions and falling back in the top box?
when ready to buy the stock, look at the situation of the overall
market and place the order when the market is up for that day
or days
You said your stop loss is 1% below the purchase price, but you said to have losses like 6 and 10%.
I would think that around 75% of those break outs would fail, so a tighter stop loss is paramount. Darvas writes to put the stop loss a fraction under the purchase price, so 10 cents would be better than 1%. Your losses would be minimal and you would be only in stocks that really have a go (another selection of the strongest).
So with a $ 50 all time high stock I would put the trigger price at
$ 50.05 and limit price at $ 50.10.
stop limit at $ 50 with the trigger price at 50.05
very thight, but like I said you only would want the very best
and your losses would be so minimal.
I have a very easy way to scan the stock to find stocks that might be interesting.
I have the following scan in www.moneycentral.com :
last price>$20; last price >0.95x52-week high; average volume last year>100,000; last price >2x52-week low; last price <2.2x52-week low; last volume>1.5xaverage volume last year
I feel that you have your money divided in too many stocks.
Darvas kept watch on about 5-8 stocks and invested his money in only a few at a time and piled it all in one if that became the big winner.
This weekend I will be starting to sort out stocks for real and I keep you posted
Have a primo weekend
well this thread seems to be quite dead now
I did my scan and it came up with DGIN IDBE VRTX VPHM
these stocks are at their high for the year, so we wait for a high
and a low for the top box
we`ll also watch the volume that it stays up
also we want a lively bouncing up and down in the top box
other stocks in the scan were PKZ ASTE ACR, but considering
the industry they`re in, they wont be rockets..........so I dont
watch them
I did my scan and it came up with DGIN IDBE VRTX VPHM
these stocks are at their high for the year, so we wait for a high
and a low for the top box
we`ll also watch the volume that it stays up
also we want a lively bouncing up and down in the top box
other stocks in the scan were PKZ ASTE ACR, but considering
the industry they`re in, they wont be rockets..........so I dont
watch them