October 31, 2007
Definition Of Nasdaq
Ms. Fiakas is a seasoned, credentialed investment professional with a diversified and successful track record as a research analyst and as an investment banker. She is a member the Association for Investment Management and Research (AIMR) and the New York Society of Security Analysts (NYSSA). Ms. Fiakas is also Managing Member of Crystal Equity Research, LLC.
Nicolas Darvas invented his Darvas Trading System back in the late 1950’s and it still works today.
It’s genius is in it’s simplicity. Darvas was completing a travelling tour round the world as he was trading stocks and was only able to access volume and price data as he moved from location to location. Remember that there was no internet back then - Darvas had to rely on outdated information in the form of a newspaper and daily telegrams on selected stocks to acquire information for his trading system.
Darvas’ broker mailed him a copy of Barrons newspaper each week which contained weekly prices of stocks together with volumes for the week. Darvas used a top down approach to investing - he only watched stocks from futuristic industries. In the 50’s these were credit card industries and the jet age. Darvas realised that the expectation of earnings was one of the greatest lures to raise stock prices higher, and together with the futuristic industry screen, these were the only fundamental factors used in his Darvas Trading System.
Once he had satisfied his requirements for fundamentals, he tracked technical data in the stock. He liked stocks that were:
1) At or near their all-time high
2) Bouncing up and down in their Darvas Boxes
3) Had price patterns of boxes stacked on-top of each other like a pyramid
4) Showing an increase in volume with advancing prices
5) Priced greater than $10
He used a new method of tracking trading ranges called “Darvas Boxes” as a way of entering and exiting stock positions. A buy signal was created if the price just pushed through the top of a Darvas Box and the price reached a new all-time high. He created a simultaneous stop loss at the level of the previous box top.
I’ve been using this strategy to buy/sell stocks for a few years … and it works brilliantly! In fact, I’m so passionate about it all that I’ve dedicated a website to Darvas’ methods.
You can read more about it here.
About the Author
Alex Chambers is a UK medical doctor who likes to buy profitable shares. He also likes to read books, use the Internet, dance (although not professionally!) and lie in bed.
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