Profiting from the Darvas Trading Method

It may be in your best interests to find out what the Nicolas Darvas trading method is. Without a doubt, information on this particular method can help you get very satisfying stock trading results.

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.

The Darvas trading system 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.

Darvas didn’t have a smooth time devising this method. He had to face several losses himself before he started enjoying profits. His losses stemmed mainly from the error of not asking questions and following too many pieces of external trading advice. Darvas realized in time that he lost a lot when he listened to others and when he tried to appear knowledgeable in front of his broker. He began making good profits when he used data from his own research and when he admitted that there were things he needed more information on. His plan becomes highly recommended when one considers that the Darvas trading method was an offshoot of a negative phase in his trading career.

You can benefit a lot from studying methods that have stood the test of time. Aside from helping you save time and effort, they also provide some assurance. You are after all, considering using a plan that has given other traders good results.

The Darvas method 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.