One of the principles of the Darvas Trading Method was to have a defined method, don’t go with what sounds or looks good. What are your first thoughts on that one Brian?

Brian: Actually that was one of the absolute best things that Darvas did for himself, was having things clearly defined for himself. In trading, the emotions, or getting caught up in the moment or getting emotionally attached to a trade is usually a big downfall for traders and where a lot of costly mistakes are made. But if you’ve got your method clearly defined, where your decision points are very clearly defined, so that when you run up to a what should I do now situation and it’s really clear for you, it makes it really easy to stick with it.

If it’s not clearly defined, that’s where you’re going to have a lot of discretionary errors that are very costly. So the fact that Darvas did this for himself, he recognized that he was human and he could get caught up in the emotions of things and this was just one way he safeguarded himself and made sure that he was making money. That was the whole point. What do you think?

David: A big part is to modernize this point slightly. Darvas had his defined method. What I took from this and the way I definitely try and apply it to trading in current day times is this. Every trader’s the same and you probably try and subscribe to a multitude of newsletters and you’re constantly being bombarded with new trading opportunities. It’s not to say that any one method is better than any other method, because there are so many ways to be profitable in the market.

The real key is to just find that one thing that works for you and then stick with it. As mentioned in this point here, it says don’t just go with what sounds or looks good. What you’ll find is, there are constantly new fantastic systems that are coming out. It’s so easy to be swayed and say, oh this new trading method is fantastic and it’s getting x percent return. I’m going to stop what I’m currently doing now and jump to the next system.

I’ve seen it time and time again where you’ve got traders who one day will be trading stocks and next week they will be trading options and then a few weeks later they’ll hear forex is the next latest greatest thing and they’ll jump over there. I’m sure Darvas, to a certain extent,he’s not getting the emails that we get these days.

But I know especially in the part of the story, I know Brian’s read it and so have I as far as the Darvas story is concerned. He ended up going back and working round the broking firm area. I can’t recall the exact point in the story, but I do recall he went back and started to be around other traders.

Brian: Yes it was when he was coming back from his tour after he had had run up his account to about $500,000. He went back and he set up a desk in the broker’s office and in less than a month, lost $100,000. That’s when he said ‘I’m out of here and I’m not doing this anymore’ because he got away from his system. He recognized that. He was getting caught up in all the hype and hot tips and the way everybody else was trading and not his successful method.

David: Yes, so again, it’s one of those extremely valuable points.

Want to learn more about the Darvas Trading System? Find out more by visiting http://www.nicolasdarvastrading.com/.