Tomato
This post is about Nicolas Darvas and his original method.
In mid July of 1994, after reading his first book, I decided that it was too long term for me. So I collapsed his method, after first doing a study on how long the public went absolutely crazy over a stock. I also reduced the stop loss to 5%. I launched my execution of this system in mid august of 1994, using 10% of my savings.
I proceeded to enter buy stops for 50% of my stake on margin (this lowers steadily to a threshold if one is successful). Notice I will have at most 4 buy stops at any one time ( the lack of diversity is the key to performance).My initial potential maximum loss on each trade is 2 1/2% of my stake (exclusive of slippage, spreads, and commission). I always
enter my protective sell stop 5% below my actual buy price.
However this does not protect me from the slippage, spreads, and commissions from the sell execution.
As of today, I have 942 trades, with 492 wins and 450 losses. I now have 79 times what I started with. This
includes all the loss from slippage, spreads, and commission.
This also includes money market interest while not invested, since I am out of the market 95% of the time.
One of the great things about the Darvas method is that it
keeps you out of the market when you should be,and this has occurred for months at a time.
I have sent you this E-mail, as you are the originator of
the Darvas thread, and I wanted to post a successful long term example of his methods in action today. He was truly the first "momentum" investor.
DARVASDARVAS |
