One thing to consider is that today you may be better off entering on the pullback after the initial breakout .... But you always run the risk of missing a really strong breakout that has no pullback( Can't win em all)... And If you are a breakout player or even a retracement kind of guy. It wouldn't hurt to keep an eye on the stocks near their all time high. Just consider it another weapon in your arsenal. I like to enter on pullbacks....AAP is a stock I've been stalking that I may be entering any day now... darvas would wait for the breakout I would rather buy at the bottom of His box.... What we now call support. darvas was a remarkable man for his time...He was a regular guy, A wall street "outsider" who was actually able to discover "Market structure" A pattern of higher highs and higher lows. With this simple method, he made himself a nice little fortune, respectable even by todays standards. Nick
When Darvas played this method he had the good fortune of a bullmarket (I think it was in de fifties) I think Darvas was not looking at 52 week highs, but all time highs. Also he combined a sort of a fundamental approach to it. (The stock had to be in a relatively 'hot' sector.) The method would have worked well in the nineties (Bull market) with tech stocks (hot sector) For now, I think we need to wait for a bull market making all time highs.... Might take 4 years or more though...
opw - yup, the bull market was in the 50s. his 70s book, he modified to '52 wk highs'. and it was still working reasonably well... (he wound up getting oil/gas/energy stocks, i think?)
I understand that in Darvas' method that he waited for "all time" new highs to be reached. However, we all know that trends (both up and down) persist sometimes for long durations, even if bounded by historical extremes. So why not go ahead and trade trends, regardless if it's a new high or not? Maybe use the 52 week rule? Maybe use a 26 week rule? (i.e. has to be above it's twenty-six wk high). Who cares......trends come on many different levels and timeframes. Why not short and/or long depending upon your preferences and filters? Maybe you only short certain issues, with a set of fundamental criteria as a prelim. screen, and use the box method as your Tech analysis entry and stop management. Maybe do the opposite and you specialize only in buying with the box method (after your prelim. screens give you the green light). Think about what I originally hypothesized in the imaginary long trade. If the box has been formed (meaning "X" number of periods has passed without a "new high") then a top is formed for the box. If you buy at that time, you are automatically buying a retracement from the high part of the box. If you are a retracement buyer/seller, this should make you What variations/and or improvements can we come up with for his method? (if any)? Can it be used on all markets, not just "bubble mania" type stocks? Is it useful in multiple time frames? If for nothing else, could it be used as a trending tool to point out trends (if boxes are consecutively stacked in the same direction?). Theres just certain things I like about his method! It's simple like the Donchian Channel breakout. It won't miss a trend. Whipsaws should be mitigated in a choppy market. (right? )No need for a computer program. Could be used on different time frames: monthly, weekly, daily, or minutes. Please shoot some holes in this method for me.....what's wrong with it? Who's used it and hates it and why gm
You Can Still Make It in the Market by Nicolas. Darvas Wall Street: The Other Las Vegas by Nicolas Darvas, Nicholas Darvas (Paperback - September 1986)
You Can Still Make It in the Market by Nicolas. Darvas Wall Street: The Other Las Vegas by Nicolas Darvas, Nicholas Darvas (Paperback - September 1986)
the book i'm talking about is "you can still make it in the market" i believe published in 1977, which i was fortunate enough to scan from a library. "wall street - the other las vegas" contains lots of anecdotes related to the first book. it's been a few years since i read it, but i was satisfied when i finished.
For anyone with Tradestation 2000i and above, there is a Darvas Box indicator written in Easy Language which also uses Klinger Volume Osc and Time Series Forecast. The vendor can be contacted at westcoaster@att.net. I purchased it recently, but have not used it extensively to say that it helps. Also, if you use e-Signal advance charts, there is a Darvas box indicator sold by sr-analyst.com