The 5 Books Every Trader Needs to Read

by Darrin Donnelly on December 21, 2010

The top 5 books for traders.

The top 5 books for traders.

If you’re looking for a last-minute gift idea for your favorite trader (who may or may not be YOU), how about giving him or her a must-read book?

Traders absolutely love books because we’re always looking to expand our knowledge base, always looking for an added edge.  

Here are five books that need to be on every trader’s bookshelf.

No. 1: How I Made $2 Million in the Stock Market by Nicolas Darvas

This is where the Darvas system was introduced to the world and it is truly a timeless Wall Street classic.  [click to continue…]

New Leaders are Stepping Up

by Darrin Donnelly on December 19, 2010

Click on chart to enlarge.

Click on chart to enlarge.

Sometimes, to get an accurate picture of an individual stock or the market as a whole, you need to take a step back and take a look at the broader view. 

For Darvas trend traders, that means scrapping the daily charts we normally rely on and evaluating the WEEKLY charts.

Last week, several leading stocks moved aggressively lower on Tuesday and Wednesday.  This spooked many traders out of positions.  In fact, three of our Darvas stocks were stopped out early in the week.

But it isn’t time to sprint for the exits.  While three of our stocks were sold last week, three other stocks hit buy points and took the place of the three positions we exited.

When we examine the weekly charts, we see that the indexes fought back to end the week higher.  The NASDAQ actually hit its highest level since January of 2008 on Friday.  [click to continue…]

Why I Bought These 2 Darvas Stocks

by Darrin Donnelly on December 16, 2010

While it’s important to be cautious in this market environment, we still have the “green light” to buy into new positions due to the Stage 2 uptrend we’re currently in.

On Wednesday, despite the fact that two Darvas stocks I had previously owned hit their sell stops, two new Darvas stocks triggered buys for us.

What are these mixed signals telling us?

 It could be that we’re seeing some sector rotation right now and new leaders are stepping in to take over as the “old” leaders are stepping down.

The bottom line is that when the market is in an uptrend, even if there is some uncertainty, you have to trust the action of your individual stocks.  If the action says sell, you sell.  If it says buy, you buy.

These two stocks gave us clear price-and-volume action that said it was time to BUY. [click to continue…]

Click on chart to enlarge.

Click on chart to enlarge.

The NASDAQ broke its eight-day winning streak on Monday and has pulled back slightly from its highs.

Of course, considering that it was up for eight straight days, a pullback was expected and the index hasn’t been hurt too badly by this week’s mild decline. 

Despite the fact that we still haven’t gotten that aggressive high-volume up day I’ve been waiting for, the NASDAQ is still well above the 50-day moving average and, as you can see with the trend lines on the chart that accompanies this article, it remains in a Stage 2 uptrend.   

In other positive news, the Dow Jones Industrial Average broke into 52-week high territory on Monday and has maintained that level. 

Yet, while the indexes look good, they don’t tell the whole story.  [click to continue…]

"How I Made Money Using the Nicolas Darvas System" by Steve Burns

"How I Made Money Using the Nicolas Darvas System" by Steve Burns

Steve Burns is living proof that you don’t have to stay glued to the ticker all day to make big money as a trader. 

Like Nicolas Darvas himself, Burns didn’t wake up one morning and decide he was going to quit his day job and become a fulltime trader.  In fact, Burns used a standard retirement account to trade his way to a $100,000 profit using the Darvas System.   He also made an additional $50,000 profit by exercising his company stock options at the correct time, right before the stock price fell more than 50%.  (He used the Darvas System to time this extremely profitable trade.)

Burns recently published a book called “How I Made Money Using the Nicolas Darvas System in which he explains exactly how he kept a fulltime job and still managed to make a quarter-million dollars trading with the Darvas method in off-hours.

In the following interview, Burns answers 10 questions for and explains how he used the Darvas System to make and KEEP his fortune. [click to continue…]

The 50-day Line is the Perfect Buy Point for this Darvas Stock

by Darrin Donnelly on December 14, 2010

Since aggressively rebounding off the 50-day moving average two weeks ago, this big-earning stock has settled into a solid Darvas Box range. 

Just last week, we saw stong buying come in on above-average volume, which tells us interest is starting to pick up for this stock. 

Now, it looks like this stock may be ready to test the 50-day moving average once again.  A test of the 50-day average, especially for a stock that has shown a tendency to bounce off this line, is a perfect “pocket” purchase opportunity. 

If this stock pulls back to the 50-day average and then reverses higher on increasing volume, we want to be buying. [click to continue…]