Ask Colin

Could you please show me how the Nicholas Darvas system works and what your opinion of this trading system is and is it still relevant in today's market!

In this forum, I do not have the time to give you a detailed explanation of Darvas' system. You will need to read his book, which is neither long, nor difficult to read.

Essentially, Darvas made his money trading a bull market. He bought upward breakouts from congestion areas on the charts. As the price moved up, he moved his stop up under the last "box" as he called it - which was just a small trading range. If his stop was hit he was out.

He claimed it worked well at the need of the bull market, because he was taken out of stock after stock as they broke down and there were few new buy signals.

In its essentials, it is a simple and basic trend trading approach, not unlike what I taught you in the seminars, only he was maybe a bit more short-term than I am.

Darvas did not have the Holy Grail. A lot of his claimed success may have been because he was travelling around the world as a dancer and had to leave stops with his broker all the time. This took a lot of the emotion out of his trading and imposed a strong discipline. Maybe that was the real secret, if there is one.