What I like about Nicholas Darvas?
Where do I start? I consider Nicolas Darvas the BEST dealer, or as he him-self said, "investor" in the world. I admit a man's poison is another man's medicine. You can not really define what is the world's best trader. It is my opinion.
Why? You must, absolutely MUST, read, re-read, study and think about every rule in the book "How I Made $ 2 million in the Stock Market". I will not lie when I say I read it over 100 times and I still read it at least once a month. Amazingly I keep learning new points.
Darvas was actually the first CANSLIM trader without the finer points. This can set up William O'Neal followers. Although Darvas actually not studying profit sectors, shares etc. are freehand stock selection meant he using CANSLIM methods. Remember that this was way back in the late 1950s.
He turned $ 25,000 into $ 2.25 million by scanning the newspapers in just five minutes during late at night, early morning, period. He him-self said it was not so much the amount of money he made happy, but the convenience and peace of mind reached him. It was so easy. Granted, he was lucky he traded his system during a roaring bull market. But his system makes money in all market conditions. It's just a fact that you can make during a run-away bull market much more. That can be said for most systems.
The perfect position for trade. When he was wrong on a trade he shrugged, cut his losses and looked for the next. No second guessing. No emotion. No ego involved. He told the reporter who interviewed him for a time magazine article he expects to be only half the time correctly.
Undoubtedly his best quality was his ability to question everything. When he was wrong why? What worked and why? What did not work in the stock market and why? Question everything and eliminate what does not. He pieced together a system that fitted his personality. The person who can do this will be a big winner in the markets.
Defects:
Whatever defects may be the best trader of the world? Actually there is one and it was very dangerous.
Money management. Boy he was happy! Buying a 100% position in a stock could leverage on the death of his account. When he 2,500 shares, on the margin of EL Bruce (a small cap unrecognized stock) bought IF things had turned his ugly here, ie the prices gapped down or fell off very sharply, Darvas would undoubtedly have been finished. Instead of writing a book about how he made his fortune in the stock market, he would have written about how they had lost a fortune. Fortunately, he made more than $ 300,000 from this transaction alone. Had he had his money management rules in place, that the profits would not have been so great but at least it had not worked out that he could live to fight another day. IF things
It took several Darvas 'immersed' in the market with little attention to the management of money and the risks. Ignorance was really delicious. Jesse Livermore was not so lucky.
Conclusion:
A shining light of hope for the man in the street that everyone some time, education, desire and determination can make BIG money in the stock market. You do not have to make massive return information to state of the art technology, data, or have in-side.
If you Darvas $ 2.25 million by scanning the paper for five minutes before going to sleep what does that say for today's hi-tech trading techniques?
His methods still work and will always work. If it stops so will the stock market.
**** 1/2 41/2 Star Trader (PS there will never be a 5-star dealer)
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