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Nicolas Darvas penned a book called How I Made $2,000,000 in the Stock Market. It
is a record of the method he invented to select and trade stocks. The recent reprint
includes an Appendix where he has a question and answer session explaining in further detail
how his system works. His basic selection criteria is based upon stocks that have hit their
52 week highs. He then has a four day entry criteria backed up with a customized exit
criteria.
As you are probably aware, any time you always want to know what you risk is going to be.
With the built in exit criteria, all the bases are covered. The exit condition is refined
as the position changes in price.
In the 2005 May issue of Technical
Analysis of Stocks & Commodities Magazine, Daryl Guppy wrote an informative article
discussing the technical implementation of the process.
For the SmartQuant QuantDeveloper environment, I've written a C# class called Darvas that
implements the
method as described in that magazine article. The code, as supplied in the attached file, as some of the indicator code
commented out. You can uncomment if you wish to use it as an indicator. The core of the
code accepts OHLC Bars as input, which should be Daily bars from a simulation run, and
generates Buy and Exit signals along with a Stop level.
The code is straight-forward enough to be ported to other environments as well.
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