A lot has already been said and continue to be said about trading systems and methods such as that from Nicolas Darvas. To truly break out in the market of your choice however, you only need to remember just four vital points.
Draft Your Personal System
Without a doubt, a trade plan is essential for every trader. Not every plan or system however is suitable for all. The best way to truly thrive in any investment market is to make sure that the plan you are following is suited exactly to your specific personality.
What this really means is that it is necessary for your plan to encompass the level and quality of loss that you are able to withstand. This should always be part of any plan you choose to follow for obvious reasons. Loss is an avoidable trading fact so true trading systems that work should be able to control your losses to levels that you can personally bear.
Modify a Ready Plan
It truly is best to have a custom plan in your hands but there is another way to get you going in trading. You may not be able to manage making your own plan but you can at least modify a plan that already exists such as the Darvas system. There are a few good systems that are ready for you to buy and use that are offered online. Just settle on one plan that more or less fits your style and tweak it to make it even more appropriate for you.
It never is a good idea to go for a plan without proper assessment. Don’t just pick a plan at random. Make sure you evaluate various trading systems and methods first. Go for a system that is in good standing with the trading community and that is already used by a lot of different traders. In this way, there will always be fellow traders who can help you out.
Use Only Back Tested Plans
All good systems pass back testing. This is regardless of whether they are customized or not. You should check if the plan you want to follow has been through this procedure. Back testing is simply the procedure of putting a system through a set of historical trading information. If a system is able to perform fairly well with this data, then there is a good chance that it will also do well in present trading situations. Be aware that back testing is the only avenue in which you can pick trading systems that work. Without testing, you will be trading as if you never had a plan.
Get the Right Tools for Trading
It should be obvious that if every plan needs to be tested, then you need to get yourself a back testing tool. Aside from this, two other tools that you need are a brokerage service and charting software. You can pick these according to various guidelines but generally, any tool for trading should be established, long standing and used by a lot of traders both old and new. Also, make sure you only pick tools that are well supported.
It is a fact that trading systems and methods like the Darvas method help ensure your success in the markets. Make sure you remember these four essential tips though in choosing and using them. Only when you follow these tips can you steer clear of dramatically huge losses.
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