It has been over 45 years since a professional dancer by the name of
Nicolas Darvas stood the stock market on its head by disclosing the
system he used to amass nearly $2,500,000. Even though he had records
to back up each trade he had made, the majority of the press and the so
called professional traders found it hard to believe his
accomplishments. Through trial and error he found it necessary to
combine the fundamentalist method of trading with the technical method
in order to find stocks that could consistently rise in price.
First he searched for stocks that showed signs of rising in price by
studying the quotes in Barron's. There were no computers that he could
use to search out stocks to fit his method of trading. He developed a
strategy which he called his "Box System" where he determined the
Support Price and Resistance Price of a stock in a Trading Range. At
that time (1950's) the terms Support, Resistance, and Trading Range were
not used so these terms were not used in the books that he wrote to tell
about his "Box System". He would build a box with the Support Price
as the Bottom of the Box and the Resistance Price as the Top of the Box.
He would place an "On-Stop Buy-Order" with his broker to buy in as soon
as the Price broke above the Top of the Box. He had an agreement with
his brokers when he had made a buy a "Stop-Loss" order was placed just
below the Bottom of the Box so if the price turned against him he was
out of the trade. He credited the use of the "On-Stop Buy-Order", the
"Stop-Loss" order along with the use of a "Trailing-Stop" once the stock
started making money for his success.
Once he had found a stock that was trading with Increased Volume at a
Price Higher than it had ever been before he would determine the Box it
was trading in. He was using Technical Analysis to determine these
facts. He would then use the Fundamentalist Method and looked to make
sure it was the best stock in best performing Industry Group. Stocks
with a good past Earnings Record or those with the greatest expection of
increasing earnings were important as the stock had to be perceived by
the trading public as a winner. He looked for stocks that had a New
Idea, New Service or some kind of New Niche to give it an advantage over
others.
In 1960 Nicolas Darvas wrote his first book "How I Made $2,000,000 in
the Stock Market" that detailed what he called his
"Techno-Fundamentalist System". Over 450,000 copies were sold in the
first two years and it was responsible for the movement that has brought
hundreds of thousands of new stock market traders that continue today.
His system is by far the best system that has ever been used to help the
average trader successfully make money in the market. Others have tried
to place a different spin on it and wrap it in a different cover without
giving Darvas any credit, but with a little investigation the truth
comes through.
At DEL Associates Limited we use the Daily DEL Report to provide our
subscribers those stocks that meet both the Technical and Fundamental
requirements. Our Daily Email Alerts provide Traders with timely
information that a stock is about ready to "Breakout". The "Box" used
by Nicolas is equilvalent to the "Cup with Handle" formation used by us.
By using the CupTrade Strategies you can load the stock into the proper
trading system and let the system automatically make each of the trades
used by Darvas.
At DEL Associates Limited we watch for the Cup
with Handle and the Inverted Cup with Handle formations to tell
us when the markets are changing direction.
This is an extremely important part
as this determines the tools (type of trades) we will
be using.
“Essential
Tools for Stock Traders”
