December 9

Nicolas Darvas – The Trading Secrets That Made Him Millions (Strategies, Rules and Quotes)

Last Updated on 9 December, 2022 by Samuelsson

Nicolas Darvas was a Hungarian-born professional dancer and stock market trader who became a millionaire in a matter of months after discovering a unique and highly successful trading strategy. He developed his trading strategy based on his own personal experiences of being a professional dancer and a stock market trader. His trading strategy was simple and easy to understand, yet highly profitable. Darvas became one of the most influential traders of the 20th century and his trading strategy has been adopted by countless traders over the years.

Darvas’s trading strategy, which he referred to as the “Box System”, was based on the idea of identifying trends in the market and then buying and selling stocks according to those trends. The strategy involved studying price charts, looking for stocks that had moved up in price significantly and holding onto them until they reached a predetermined profit target. Darvas believed that most stocks will eventually move up in price, so the key was to identify the right stocks at the right time and then buy them before they moved up.

Darvas’s strategy proved to be immensely successful, and he eventually became a millionaire. He wrote his famous book, “How I Made $2,000,000 in the Stock Market”, in which he detailed his trading strategy and how he turned it into a lucrative business. The book has become a favorite of traders around the world, and many credit it with helping them to become successful traders.

Nicolas Darvas trading strategies

Nicolas Darvas was a dancer turned trader who developed a trading system that allowed him to become one of the most successful traders of all time. His system, known as the Darvas Box, is still used today by many traders and is an effective way to identify potential trading opportunities.

The Darvas Box strategy is essentially a trend-following technique that uses an “up” trend for entry and a “down” trend for exit. The strategy requires the trader to draw a box around a stock that is in an “up” trend, and then wait for the stock to break out of the box to the upside. When the stock breaks out of the box, the trader should buy the stock and place a stop-loss order just below the box. The trader should then place a target above the box, and if the stock reaches the target, the trader should exit the trade.

The Darvas Box strategy is based on the premise that stocks tend to move in a predictable pattern of “up” and “down” trends. By drawing a box around the stock that is in an “up” trend, the trader can identify potential buying opportunities. The trader can then use the box to identify potential selling points, as well as the stop-loss and target levels.

The Darvas Box strategy is a relatively simple strategy that is suitable for both short-term and long-term traders. It requires the trader to be disciplined and to follow the rules of the strategy, but by doing so, the trader can identify potential trading opportunities that could lead to profitable trades. The strategy has stood the test of time and is still used by many traders today.

The Box System by Nicolas Darvas

The Nicolas Darvas Box System is a technical analysis strategy based on the study of price movement. It is considered a trend-following system, which means it is designed to identify and capitalize on upward and downward price trends. The system uses the concept of “boxes” to show when a stock is in an uptrend or a downtrend. When a stock’s price moves above a predetermined level, the stock is said to be in an uptrend, or “box”. When the stock’s price falls below that level, the stock is said to be in a downtrend, or “box”.

The system requires a trader to identify the “buy” and “sell” points for a stock. When the stock’s price is in an uptrend, the trader should buy the stock. When the stock’s price is in a downtrend, the trader should sell the stock. The system also requires the trader to set a fixed stop-loss and profit-taking levels. The stop-loss is the predetermined level at which the trader will sell the stock if it falls below the predetermined level. The profit-taking level is the predetermined level at which the trader will sell the stock if it rises above the predetermined level.

The Nicolas Darvas Box System is a great tool for traders of all levels. It is easy to understand and implement, and it has proven to be a successful trading strategy. It can be used to identify entry and exit points, set realistic stop-loss and profit-taking levels, and manage risk. The system is also a great way to stay on top of the market and capitalize on price trends.

Whether you are a beginner or a professional trader, the Nicolas Darvas Box System is a great way to start trading. It is a simple yet effective system that doesn’t require complex analysis or sophisticated software. If you are serious about trading, then this system is a great way to get started.

Nicolas Darvas Quotes

1. “The way to make money in the stock market is to buy good stocks and hold them until they go up, no matter how long it takes.” – Nicolas Darvas

2. “I turned my losses into profits by learning how to cut my losses quickly and let my profits run.” – Nicolas Darvas

3. “The only sure way to make money in the stock market is to buy stocks at the right time and buy them right.” – Nicolas Darvas

4. “It is not difficult to make money in the stock market if you take the time to learn the basics and stick to a few simple rules.” – Nicolas Darvas

5. “Never try to anticipate or guess the market. Instead, follow it.” – Nicolas Darvas

6. “The stock market is like a box of chocolates. You never know what you’re going to get.” – Nicolas Darvas

7. “The most important thing in stock market investing is to have patience and discipline.” – Nicolas Darvas

8. “Successful stock market investing requires an understanding of fundamental analysis, technical analysis, and money management.” – Nicolas Darvas

9. “The secret to stock market success is to buy low and sell high.” – Nicolas Darvas

10. “The stock market is a zero-sum game. You win some, you lose some.” – Nicolas Darvas

Criticism

Nicolas Darvas was an icon in the trading world, having achieved legendary success after turning a mere $10,000 into over $2 million in just two years. His story is remarkable, and his teachings have been studied by many aspiring traders in search of the same kind of success he achieved. In spite of his remarkable success, not everyone is a fan of Darvas.

Critics of Darvas argue that his approach was more luck than skill. They point to the fact that he had no formal trading education, and was a professional dancer before becoming a trader. They also point to the fact that he made some very lucky moves during his trading career, such as selling at the peak of the market in 1962.

Critics also argue that Darvas’ methods are outdated and no longer applicable in today’s markets. They point to the fact that the markets have changed significantly since Darvas was trading and that his methods are no longer relevant. They also point out that Darvas’ methods are difficult to replicate, requiring a lot of time and effort.

Finally, critics argue that Darvas’ approach is overly simplistic and doesn’t take into account the complexities of the markets. They argue that his approach doesn’t take into account the fact that markets are constantly evolving and changing, and that his approach can’t keep up with these changes.

Despite the criticism, Nicolas Darvas’ success has been a source of inspiration for many aspiring traders. His story is one of determination and perseverance, and his approach has been studied and adapted by many traders since. While his methods may not be applicable today, they serve as a reminder of the potential that exists in the markets if you are willing to put in the effort.

FAQ

1. Who is Nicolas Darvas?

Nicolas Darvas was a successful Hungarian-American stock trader who developed a unique and profitable trading system. He was born in Hungary in 1920, and became a professional dancer in the 1950s. After becoming wealthy from stock trading, he wrote two best-selling books, How I Made $2,000,000 in the Stock Market and Wall Street: The Other Las Vegas. Darvas’s trading system focused on buying stocks that had strong trends, and he believed that a stock’s price was determined by supply and demand.

2. What is the Darvas system?

The Darvas system is a trading strategy developed by Nicolas Darvas. It involves buying stocks that have strong trends, and trading them based on their price movements. Darvas believed that a stock’s price was determined by the demand for it, and he looked for stocks with increasing volume and prices. He also looked for stocks that had recently broken above or below certain levels, such as their historic highs or lows.

3. What indicators does Darvas use in his system?

Darvas used a variety of technical indicators in his system. He looked for stocks with increasing volume, as well as stocks that had recently broken above or below certain levels, such as their historic highs or lows. He also looked for stocks with strong trends, and analyzed their momentum and the strength of the trend.

4. How did Darvas make money?

Nicolas Darvas made money by buying stocks that had strong trends, and trading them based on their price movements. He believed that a stock’s price was determined by supply and demand, and he looked for stocks with increasing volume and prices. He also looked for stocks that had recently broken above or below certain levels, such as their historic highs or lows.

5. What is the “box theory” of Darvas?

The “box theory” is a trading strategy developed by Nicolas Darvas. It involves buying stocks that have strong trends and trading them based on their price movements. Darvas believed that a stock’s price was determined by supply and demand, and he looked for stocks with increasing volume and prices. He also looked for stocks that had recently broken above or below certain levels, such as their historic highs or lows. The “box theory” is based on the idea that the price of a stock will often oscillate within a defined range, which Darvas referred to as a “box”. When the price of a stock breaks out of the box, it is an indication that the stock has potential for further gains.

6. What is the “20-day breakout” of Darvas?

The “20-day breakout” is a trading strategy developed by Nicolas Darvas. It involves buying stocks that have broken above their 20-day high, and selling them when they break below their 20-day low. Darvas believed that a stock’s price was determined by supply and demand, and he looked for stocks with increasing volume and prices. He also looked for stocks that had recently broken above or below certain levels, such as their historic highs or lows. The “20-day breakout” is based on the idea that a stock’s price will often experience a strong move when it breaks above or below its 20-day high or low.

7. What advice did Darvas give regarding stock selection?

Nicolas Darvas believed that a stock’s price was determined by supply and demand, and he looked for stocks with increasing volume and prices. He also looked for stocks that had recently broken above or below certain levels, such as their historic highs or lows. He also recommended looking for stocks with strong trends and analyzing their momentum and the strength of the trend. Finally, Darvas suggested using the “box theory” and the “20-day breakout” to identify potential entry and exit points.

Summary

Nicolas Darvas was a professional dancer who became a successful stock market investor. In his book “How I Made $2,000,000 in the Stock Market,” Darvas explains his strategy of buying stocks when they break out of a trading range. He believes that a stock is only worth buying when it breaks out of a trading range, meaning that its price has exceeded the highest price it has been in the past several weeks to months. He also advocates for selling stocks if the price falls below the trading range and not letting emotion or fear drive investment decisions. Additionally, Darvas suggests that if investors cannot find any stocks that meet their criteria, they should not invest at all. He also emphasizes the importance of research and discipline in stock market investing.


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