The Darvas Method

[aptus]

AIM is a poor trading technique but an excellent long-term investment technique. In most successful trading techniques you buy on strength and sell on weakness.

Investment techniques are the opposite. You buy on weakness and sell on strength (this idea was promoted by no less than Benjamin Graham). Investment techniques also require you study a stock to ensure it has good long-term potential.

Trading techniques don't require good long-term fundamentals because you're in and out in a relatively short time.

In both cases, you should also diversify your holdings to provide better risk protection.

In summary, you can't really compare the Darvas Method (a trading system) with AIM (an investing system). However I don't believe that's what Don was doing. He was simply showing how you could re-interpret an AIM chart to work like the Darvas method.

Regards,
Mark

http://www.automaticinvestor.com