What is the Darvas Trading Method?
Find out how Darvas made millions with the Darvas trading system.
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At some point in your career as a trader, you would want to know about the Darvas trading method. Just what is this all about and how can it help you achieve outstanding stock profits?
This strategy is actually simply a trade system. This is a plan that a good trader follows to define points of entry and exit and to determine appropriate risk management rules. This particular plan is quite attractive when one remembers how well the original author profited from it. Nicolas Darvas was actually a globetrotting ballroom dancer. During his time in the 1950s however, he was able to earn more than many individuals who specialized in just trading. To be exact, the dancer was able to make $2.2 million out of just $25 thousand.
His method was simpler than other stock trading systems. It was what was known as a trend trading technique. This was because it involved identifying stocks and trends that were already strong or bullish. This provided some assurance that they were less likely to fall dramatically and therefore required less close monitoring. Asset identification points used were price action and volume. These were key elements that helped in volatility calculations.
This technique has been making waves because studies have revealed that it provides good results close to 50% of the time. What makes it even more enticing to use is that it is capable of preserving capital. What this means is that even if you start losing, you will never lose too much by following the Darvas trading system.
The truth is that Nicolas was able to arrive at this technique after suffering considerable losses himself. At some point in his trading career, he made the mistakes of not asking the right questions and listening to too many trading opinions and tips. He later realized that he tended to lose more when he applied other people’s insights and pretended that he knew everything. His gains started coming in when he used the fruits of intensive research to trade and when he began asking questions. The fact that he had to go through terrible losses makes his plan even more recommended. You have the assurance that the Darvas trading method was devised after a painful learning process.
As a trader, it is always worth your time to study or even apply strategies that already work. Doing so won’t just save you a lot of time. It will also give you peace of mind knowing you have a plan that has already worked for so many other successful individuals.
Darvas’ plan can be followed straight out of the box. Be careful though. You have to make sure that his plan fits your profile and personality as a trader. It has to fit your preferred risk management plan. The most important part about applying stock trading systems is knowing that you are able to take the level of risk that you can live with. Darvas’ technique can and will work but don’t be a blind follower. Find out everything you can about his system and how it applies to you before you start using it.
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