Darvas trading

yonnie · 25 August 2007

Have been flirting with this type of trading for years, but never took the plunge.

An explanation might be that I`m too impatient to wait for the right opportunity, because this type of trading is longer term trend trading.

For the last year my trading has been excellent and I`m doing it full-time but I give too much back in cutting my losses a little late.

What I like about Darvas is the very tight stop loss. He would put in an order just above the all-time high and a stop loss order just under the all-time high. Probably get stopped out almost all the time.

Although in his examples his stop loss order was at least a dollar below his entry.

When the trade was underway, he moved the stop loss just under the bottom of the top box.
Now I look at the charts of all those killer trades he made, but if he really placed the stop loss there, he would have been stopped out long before he was.

He must have changed his views a little after doing those trades.

Wonder too if the choice of stocks is big enough in Oz or that I would be better off trading on the US market.

I would like to discuss this type of trading with other interested members.

wayneL · 25 August 2007

yonnie said:
Have been flirting with this type of trading for years, but never took the plunge.

An explanation might be that I`m too impatient to wait for the right opportunity, because this type of trading is longer term trend trading.

For the last year my trading has been excellent and I`m doing it full-time but I give too much back in cutting my losses a little late.

What I like about Darvas is the very tight stop loss. He would put in an order just above the all-time high and a stop loss order just under the all-time high. Probably get stopped out almost all the time.

Although in his examples his stop loss order was at least a dollar below his entry.

When the trade was underway, he moved the stop loss just under the bottom of the top box.
Now I look at the charts of all those killer trades he made, but if he really placed the stop loss there, he would have been stopped out long before he was.

He must have changed his views a little after doing those trades.

Wonder too if the choice of stocks is big enough in Oz or that I would be better off trading on the US market.

I would like to discuss this type of trading with other interested members.

I thought his stop was below the low of "the box". (Dunno, just recall reading somewhere)

tech/a · 25 August 2007

Agree with Wayne.

His methodolgy was based around the observation that a stock moved from consolidation to consolidation an observation shared by Steidelmayer.

Anyway as a stock moved to a new high it would at sometime retrace before moving off again,this made the boundaries of his box.
Some were deeper than the other but as long as trading kept within the box he wasnt concerned about his trade.

This box observation is seen in all timeframes and although I dont use it but its obvious every day I look at 5,15,60 min charts.

Sean K · 25 August 2007

Isn't Darvas about buying stocks that have just broken a 52 week high, and confirmed the break. Not just any old breakout...

tcoates · 25 August 2007

"buy" when price > top of box

(see also http://www.gerryco.com/tech/darvas.html for pretty pictures)

Tim

GreatPig · 25 August 2007

Agree with Kennas: breakout to a new 52 week high.

http://www.darvastrade.com/darvas-boxes

However, what must be taken into account is that the new high must be a significant new high. By this we mean that the stock has broken away from an established sideways trading range and by undergoing a defined time of increased buying, that can be seen by and increase in the stocks volume, has reached a new high for the last year (365 days).

Cheers,
GP

tech/a · 25 August 2007

Initially YES.(new highs)
But then to manage the trade from box to box.
From "How I made $2,000,000 in the Stock Market"

If you think about it a bit in the example above you'll note that progression from box to box made new highs.If you start with a yearly high then each progressive high becomes a new high.

Sean K · 25 August 2007

tech/a said:
Initially YES.(new highs)
But then to manage the trade from box to box.
From "How I made $2,000,000 in the Stock Market"

If you think about it a bit in the example above you'll note that progression from box to box made new highs.If you start with a yearly high then each progressive high becomes a new high.

Yep. Great bullmarket system. I think this was a criticism of his work. Could have been a little profitable over the past 4 years....

motorway · 25 August 2007

kennas said:
Yep. Great bullmarket system. I think this was a criticism of his work. Could have been a little profitable over the past 4 years....

Yes So was buying the dips or anything else
that followed a trend (because there was one)

I think His first book involved a similar mkt...

Also how many stocks produced his profits (very few)
What was his position size with margin (Huge)

Given a trend where are the best buy points?
in terms of R/R

motorway

tech/a · 25 August 2007

So tell me how do you profit without a trend of some degree.
You have to have a sell higher than your buy.
In between regardless of timeframe is a trend of some sort----of some duration is there not?
Wether you buy low sell high or buy high and sell higher.
(Forgetting shorts and exotics).

yonnie · 25 August 2007

when Darvas placed an on stop buy order, he would do that a fraction (there were fractions in those days) above an all-time high and placed the stop loss a fraction under the all-time high (see pages 188 & 197).
so he would be out like a flash, but with such a minimal loss. you can have heaps of losses like that before it starts to mount up.

only when the price moved higher and formed new boxes would Darvas place the stop loss order under the new box.

I think bunyip is trading a bit like this and maybe nizar.

others are o`neil and david ryan so there is heaps of money in it.

yonnie · 25 August 2007

motorway,

Darvas had heaps of other trades that made him 10-15%,
but yeah those few were his killer trades.

but that`s for all trend following systems.

David Ryan made around 160% for 3 years running and its so much easier on the mind than the intraday and short-term trading stuff.

maybe I`m getting too old.

Darvas trading

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