Nicholas Darvas Reveals The Biggest Trading Secret Of All Time -
Discover The Truth
Nicholas Darvas was a brilliant investor, and one of the first
traders to use technical analysis. At the height of his fortune,
he made 2.2 million dollars. If Darvas had invested today, that
2.2 million would be 20 million!
Before Darvas came to America he studied economics at the
University of Budapest. In1951, he immigrated to the United
States, where he trained with his half-sister, Julia, to be a
ballroom dancer. And he was a very good dancer, touring the
world by 1956.
He started investing in 1952, a ballroom dancer who had never
invested in the stock market. But a Toronto nightclub couldn`t
pay him in cash, so they paid him with three thousand shares of
a Canadian mining company called Brilund. Two months later, the
stock tripled and Darvas made a tidy profit. An investor was
born.
Like anyone beginning to trade on the stock market, Darvas made
his mistakes. When he started out, many of his trades were
gambles. He would pick companies that were the next big thing,
or that came recommended by other traders. Many of his first
large trades resulted in a huge losses. But cheered on by
whatever small profits he did make, Darvas began asking
questions about why stocks behaved the way they did.
Realizing that even experts couldn`t predict the market, Darvas
decided that he needed to acquire his own understanding. He
began devouring newsletters, books, tip sheets, "hot tips", and
so-called insider information, in his quest to understand the
market.
Yet, despite his arsenal of knowledge, Darvas continued to lose
money. In 1955, he purchased over fifty thousand dollars worth
of a company called Jones and Laughlin. Jones and Laughlin had
an excellent price to earnings ratio, high dividends, and was in
a strong industry group. He was so confident in his analysis,
that he bought most of this stock on margin. Then Jones and
Laughlin began to fall.
Jones and Laughlin`s price fell far enough to account for a
$9,000 loss. In a desperate attempt to recoup his losses Darvas
bought a stock he knew virtually nothing about. Soon it had
risen to a point where he regained about half of his losses.
At this point in his career, Darvas was frustrated with his
attempts at analyzing stocks. With Jones and Laughlin, he had
put a value on the stock and expected the price of the stock to
behave as he expected. When the stock price fell instead of
climbing as expected, Darvas finally accepted that his method
wasn`t working. He decided there wasn`t much worth in analyzing
stocks by trying to assess their value. Annoyed with information
from tip sheets, friends, so called experts, and even Wall
Street maxims, he decided to shun most of these common sources.
In 1956 Darvas embarked on a two-year tour of the world to
showcase his ballroom dancing. During this time he developed his
famed Darvas Box method of screening stocks. Wanting to keep up
on his holdings in stock he already owned and always on the
lookout for new stocks, Darvas looked for ways to get American
stock quotes while he traveled. This was a daunting task, but
arrangements were made to obtain a copy of Barron`s or the Wall
Street Journal through United States Embassies, and Brokers
wired time sensitive information when needed.
Without brokers, friends, or other investors to influence him,
Darvas developed a method of picking stocks based solely on the
stock`s price and volume. By the time he returned to New York in
1959 he had made about $500,000. After Darvas returned to New
York, people who were amazed with his success began to give him
"hot tips" and stock advice again. Darvas listened to them, and
took huge losses on the fortune he had made.
Realizing that it was the human element in stock trading that
was his downfall, Darvas sequestered himself in Paris in
February of 1959. He made arrangements with his brokers to make
all his trades via wire and get the day`s highs, lows and
closing prices. Using very little data, and a lot of
intelligence and discipline, Darvas refined his Box method of
picking stocks. Within six months, he had turned a profit of two
million dollars.
Nicholas Darvas is regarded as one of the best traders in the
history of the market. Darvas Boxes are used today and are the
subject of analysis for financial researchers. Many software
firms are developing programs that make the exact same
observations and decisions that Darvas made as he watched stock
prices and volume. His method is complicated and difficult to
master, but it has been rigorously tested by those in the
business and has been found to be one of the best methods out
there.
Discover How Nicholas Darvas, Turned $25,000 into $2.25
million. http://www.nicholasda
rvastrading.com