Darvas or IBD?

Discussion in 'Educational Resources' started by bankroll, Jun 12, 2013.

Darvas or IBD?

  1. Darvas

    2 vote(s)
  2. IBD

    3 vote(s)

    2 vote(s)
  1. I am a little bit confused about which one I should start with to investigate further? Empirical or scientific evidence that one is more effective than the other? Both methods are praised.

    The differences:
    - William O'Neill's basic book, How to Make Money in Stocks: A Winning System in Good Times and Bad is a thicker one (464 pages), currently in it's 4th edition, fully updated to current market conditions
    - Nicolas Darvas' basic book, How I Made $2,000,000 in the Stock Market is a thin one, only 190 pages and hasn't been updated since the 50s or 70s?

    Though, I don't know if that means anything at all for timeless knowledge. Both authors have other books - older and newer - as well. William O'Neill's company also offers official learning courses at investors.com and Darvas-style trading courses are offered by his disciplines as he is unfortunately no longer with us.

    I need some input on which method should I choose? Darvas or IBD? A book or a course? If results are more important and I have more money than time - though not sure if it is the right approach here.
  2. Both are fundamentally similar.

    Darvas is a little more basic, but he does offer his "rules". The rules are explained in more detail in his "Wall Street - The Other Las Vegas" book.

    Darvas focuses on buying stocks breaking out of trading ranges to new All-Time Highs (or 52-week highs after a bear market).

    The emphasis is on buying the new high after the stock breaks out of a proper "box". A Darvas box is formed when a stock sets a new high, and trades below it for at least 3 days. Once the top of the box is set, the stock must trade above a low for at least 3 days.

    A buy stop is placed .25 above the top of the box, and the stop-loss .25 below the top of the box. Both are dangerous in modern markets, so you'll need to adjust by putting in your trade when the stock begins to move, or place wider stops. Some people even wait until the stock's first reaction touches the top of the box before advancing again. That's dangerous, too, because the stock may keep going and never react to the top of the box.

    O'Neill has greater focus on chart formations and fundamental rankings (as found in IBD and Daily Graphs Online). The chart pattern he prefers is the cup with handle, with the handle downtrending for at least 7 trading days on greatly reduced volume.

    O'Neill doesn't have hard and fast rules, just guidelines. He leaves it up to you to learn to identify the traits of winning stocks.

    And possibly to sell more books and newspapers, while avoiding liability and the misrepresentation claims that hounded Darvas after his book came out...

    But he does show you the path according to his experience.

    Both are good, but good old fashioned chart reading, looking for cup with handles, flags, pennants, breakaway gaps, etc., will do more for you... The best performers said they reviewed 300-400 stocks each and every day, getting to know them so they can choose the "right" ones and jump on board when they take off...
  3. gaj


    i believe that:

    o'neill said he based some stuff from darvas AND
    darvas based his stuff off wyckoff.

    darvas' book is quicker/easier to read than o'neill's. they're both good to read.

    there's also a couple books that came out a couple years ago "trade like an o'neil disciple" (and a followup, i think) which shows actual trades using o'neil methods.

    there's no reason to pay for courses on any of those things, the lessons are all in the book. and any specific caveats not mentioned in the book (by a theoretical instructor) will go over your head until you see them in actual trading and they stick in your brain.
  4. Both are similar in terms of which stocks to invest in....primarily fundamentally sound stocks that are strong performers price wise.

    In terms of which method to "follow", I would suggest reading everything you can get your hands on for both of them. Then work on your timing. First get in on the breakout of Darvas boxes and handles of WJO. Then keep refining your timing to earlier and earlier entries until you are able to spot when the right side of the cup is forming. You want the herd to push you on the BO of the handle or the top of the box....meaning you are in BEFORE the herd.

    So, in summary, have a list of stocks that are making the left side of the cup or box......watch them daily until they finally form the right side of the cup and handle. Take the trades out of the handle. Then, after doing this for a little while, refine your entry so you are then getting in before the handle.

    best of luck.
  5. Would you be kind to release the acronyms WJO and BO? Many thanks.
  6. The reviewer that comes on top on Amazon's reviews for "Wall Street - The Other Las Vegas" says Darvas's strategy was best described in "How I Made $2,000,000 in the Stock Market" but it's just a review on Amazon so he might be wrong. On the other hand, much more people have bought "How I Made $2,000,000 in the Stock Market" than "Wall Street - The Other Las Vegas". Not that it means anything.
  7. chimera


    Darvas was kicked out of the us for lying in his book. He never made anything like those gains. D.A basically told him not to return.

    i loved "How I Made $2 million"

    i think the whole thing was pure fiction now. reminds me of the rich dad b*s* books! Tell a great piece of fiction as if it really did happen.

    I mean it well written with many of the great trading cliches covered but pure fiction.

    follow trends, cut losses, let profits run, only trade in high quality stocks in bull markets...what more do you need?
  8. William J Oneil and Break Out
  9. I found it otherwise. I don't have my copy of either book handy, but I remember in Wall Street, on one page in the last 1/3rd of the book, the rules were explicitly laid out.

    But you can put together the whole picture reading the 2M book, too. His books are easy reads, so it's not too hard.
    #10     Jun 12, 2013