|
The fact that Nicolas Darvas was a famous professional dancer was not the best education for becoming a successful stock trader. However, the fact that Nicolas Darvas managed to take a small trading stake to over 2 Million Dollars in a little over 2 years is an incredible achievement.
Furthermore, Nicolas Darvas went on to document the whole experience in his acclaimed book - How I Made 2 Million Dollars In The Stock Market. Now that might sound like a cheesy title, but within those pages is probably about as much wisdom on successful stock market trading that you will find anywhere.
Nicolas Darvas was not always successful. In fact, he ran up and enourmous string of losses during his initial attempts at make a profit in the stock markets. These sour trades were generally based upon bad emotional decisions, bad advice from 'Financial Professionals', and unsubstantiated rumours. Sounds familiar?
After this run of losses Nicolas Darvas took a different tack, and plunged his money into a couple of stocks that were rising. The stocks continued to rise and to his surprise, Darvas made a profit.
On taking this profit Darvas took some time out to assess his actions. He looked at the stocks that had made him the profit and noticed that he had bought on a 52 week high with a jump in volume. Nicolas Darvas then looked at some other stocks that were showing a similar behaviour and noticed that the stocks would either take off, or immediately rebound to a lower price.
By knowing this, Darvas founded what he called his Darvas Box Theory. This theory involved only buying stocks that were making a 52 week high on higher volume. He would also place a stop loss that would indicate the bottom of the 'Darvas Box' so that he would only take a small loss.
From here, Nicolas Darvas went on to turn his small starting capital into over 2 million dollars. His system also meant that he was automatically out of the market during bear runs and so retained his capital. So looking at what Darvas achieved, you should not just think that his amazing system made him a millionaire. What made him a success was that he took time to set out a solid trading plan. Then he stuck to his trading plan to the extent that he would only look at the prices page of the Wall Street Journal. He would rip this page from the paper and throw the rest of it into the bin so as not to be affected by news and rumour!
If you find this interesting, then you should get yourself a copy of How I Made 2 Million Dollars In The Stock Market. It may be the best $10 you ever spend. Dominic Foster runs TraderKnowledge.com where you can find out more about Nicolas Darvas and get your Free 5 Part Trading Course.
Trackback(0)
Copyright 2007. All Rights Reserved.  |
TrackBack URI for this entry
Show/Hide comment form