darvasfan

I'm not sure if it will matter to the interpretation, but Williams' VSA is not pure Wyckoff. It is modified Wykcoff. As I understand it, Weis and Gary Fullett are pure Wyckoff instructors. So, I'm not sure if there might be some minor conflict in interpretation of the Weis Wave vs. VSA.

Thanks. I understand what you are saying.

I agree with this statement completely. I believe I am finally in that strategy now, but have not mastered it. Mental sabotage issues are present as well. I've arrived here after exploring everything from Gann to Elliott Wave to pure TA to candles to Murray Math to MA crossover stategies to price pattern strategies, etc, etc. And yes, I realize that I've been down a crazy road. I'm settled on a strategy now, but still not sure that I can make it work successfully.

Thanks for the reply. I agree with the statement above completely. Seeing setups of your plan in the past is really easy. The hard part is seeing them develop in real time, being patient for the correct setup, and not taking something that sort of looks like the setup just to trade. I'm curious about your loss prevention plan though. Is that controlled by your setups and "anti" or, once you're in a trade, do you simply not stay in if it starts to move toward a loss?

No, I'm not "sure" of anything. I use a somewhat modified CANSLIM approach which utilizes Raschke's 3/10/16 MACD oscillator. Only trade with the trend, usually pullbacks but also breakouts after periods of consolidation.

Spearpoint, if you wouldn't mind, I would like to explore what you are saying a little further. I've been trading for almost 10 years, mostly very unsuccessfully. After blowing out a small futures account, blowing out several paper accounts, moving on to stocks and seriously damaging that acct. (20% loss over 4 years), I am at the point of either giving up or doing something different - obviously. In my stock acct., I have never taken a loss on any single trade greater than 1% of my equity, and usually, it has been less than that - .5% for example. Thus, I've never had the "big" loss that wipes an acct. out. My losses have been a very long, slow bleed. I usually use a stop that appears to be at a logical point of S/R. When I use a bigger stop to give it "more room", the stop invariably gets taken out anyway. When I use a tighter stop, either it was correct and I am stopped out before a much bigger loss would have happened, or I get stopped out only to see the market run in the opposite direction. The end result is a "relatively" small loss wither way. The problem is that those small losses add up to big losses. Unfortunately, I have not had consistent or substantial gains to offset those. Now, to your point, I would be interested in hearing further about how you avoid losses by your mindset. I have often had that thought, but have never done it because of the huge amount of trading info. saying to set your stop at logical points, give the trade room to work, don't take small profits, etc., etc. Thanks for any addl. help you can offer.

In my limited experience reading Mitsubishi, my guess is that this article has struck a particular nerve with him since he believes that markets are predictable - hence his efforts at finding a way to do so. He is violently reacting to something counter to his beliefs and, in the process, is torching politics, religion and other things. Quite an interesting and violent reaction to an article.

Bob, I would say that the heart of CANSLIM, as it relates to volume analysis, is exactly what Darvas was looking at. So, for swing or longer term trading, I don't believe that today's volume would make it any different than in the past. It's all relative. I only wish I traded like Darvas. He was very profitable. I'm not. My "system" is a synthesis. I do trade breakouts on occasion using the box system, but I prefer trading pullbacks in an uptrend. Darvas' system does not work well in a non-trending or weak trending environment and he readily admitted such. His expertise was that when those trending markets came along, he exploited the heck out of it. Best, Darvasfan

I'll do my best on summarizing Darvas. He wrote a great book back in 1960: How I Made $2,000,000 in the Stock Market. He made that money during the late 50s bull market. But, he also went on to use his method successfully until he died sometime in the late 70s. He made several hundred thousand trading National Semiconductor when the bear market of the early 70s was over. He was a true renaissance man. As far as I can tell, Darvas only went long stocks. He never went short. So, when the market was a bear market, he simply stayed out. He was basically a breakout trader. He did not use charts, only stock quotes that he received either from the newspaper, or maybe Barron's. Since he was a professional dancer, he actually made most of his money while he was touring in Europe. However, even though he did not use charts, his method applies very easily, if not more so, to charts. Bill O'Neal, I believe, borrowed heavily from Darvas, who in turn borrowed from his predecessors. Darvas would look for young, explosive growth stocks that were involved in some new or different facet of society. He didn't care for blue chips. This would equate to the N in CANSLIM. For example, he made a huge amount of money in Lorillard, which was the company that came up with the first filtered cigarette. Darvas would then look for substantial volume coming into the stock while, at the same time, the stock was moving up in price. He would then look to buy the stock on a breakout to a new high. Fundamentally, other than the "new" element, he would focus primarily on stocks that had really strong earnings. That is about the only real fundamental he cared about. His technical system involved "boxes". Once a stock broke into a new high, he would buy the breakout. When the move stopped, and price fell from the high for 3 days (or more), he would mark the high as the top of the box. After the pull back, when the stock made a low and then rallied for 3 days (or more), that pivot low would be the bottom of the box. He would move his stop loss a small percentage below the low of the box. Then, it was just a matter of following the stock, and then watching it move up, make new boxes, while trailing the stop below the low of the box. He generally followed that method, but he was not a mechanical trader. There were occasions when the stock was "not acting right" where he actually exited before his stop was hit. It think he was picking up some Wyckoff there but he did not give any credit for that "feel". His method is still sound. Check out Apple and you can see that at certain points applying the Darvas method, one could have made 150 points or more at any one stage of the move. Darvas' method is simple; but, it is not easy. Hope this helps.

No worries. It's cool. Apology accepted, and thanks for taking the time to offer your help.

No need to get your panties in a wad, phantom. I didn't say you weren't telling the truth. I was simply trying to help out based on information I have from Linda R, which is quite accurate. I don't have any axe to grind here. I'm a nobody. I'm not a profitable trader. I'm simply a guy struggling to get it. It's odd that you feel the need to immediately be defensive about a simple, truthful piece of info. I offered. Quite odd, indeed.

I don't know about Chick being a self proclaimed loser in the long run. Here's what he says on his bio: "Professional trader since 1979 (trading his own account), during which time he has made well over 10,000 trades, over $100,000 profit in one day, over $200,000 profit in one week and well over $1,000,000 profit in one year; one time turning $100,000 into $1,500,000 in eighteen months. (Note: an accountant's letter verifying this result is available on this Web site.)" As to Rashke, I have an old lecture she gave to the telerate seminars with a workbook. She stated: "The concepts introduced in this workshop are patterns I have been using since 1981 when I originally subscribed to a charting service called Security Market Research. The service plotted a 3-10 simple moving average oscillator with a 16 period moving average of the oscillator." She goes on in the lecture to say that she uses now the MACD with a 3-10/16 which replicates the SMR oscillator. I don't have Street Smarts, so don't know what she says there. But, I think my original statement was very accurate.

/ The correct time frame for the signals is what works, of course. But, I believe the best, and the one Rashke uses, is a 3/10 with a 16 smoothing. That's based on the old SMR approach that Chick Goslin uses. It's phenomenal what that does. Unfortunately, I still don't trust it enough to avoid second guessing. My person hang-up.

Yes, I am fully aware of the later years of Livermore's life and his untimely, tragic death. I am also aware that he went bankrupt and aware that he also made back his money and paid off his creditors even though he was not required to do so. There is no question that his life was a mess and that often translated into the trading blow ups that he had. However, all that does nothing to take away from his brilliance as a trader as well as the masterpiece Reminiscences. There are gems located throughout that book, overall strategies for trading - not tactics - but strategies, and warnings of things to avoid. You can see Livermore's strategies at work in people like Nicholas Darvas and Bill O'Neil. In fact, the latter gives quite a bit of credit to Livermore for helping establish the CAN SLIM foundational strategy. With endorsements like that, in addition to other very successful traders, who are no doubt aware of the entire Livermore story, there is nothing to be baffled about. Reminiscences is a masterwork that has stood the test of time.

If you want to save yourself alot of time looking for the right approach, I would strongly suggest reading Nicholas Darvas "How I made $2,000,000 in the Stock Market" and then go right to William O'Neal's most recent book titled "The Successful Investor". That will get you off to a great start. You'll find, however, that both authors/traders recommend melding fundamental with technical analysis. The first big question you should answer is why do you want to be buying stocks in a down market?