Son of a gun, who needs google? Found it right here on ET: http://www.elitetrader.com/vb/showthread.php?s=&postid=1188197&highlight=lefkowitz#post1188197
OK, found the original article with a quote from Darvas. This explains it a little better: That's better. If he had the ascertainable profits in just one account, no doubt he had made the full amount claimed in all of his accounts. Thank god for ET and google!! My faith is restored.
Since the intraday ES is not making a new all-time high, you'd be flat if you followed his system. Darvas specifically says only use it with stocks making new all-time highs.
I use the Darvas box method on a daily basis in the ZB. It works like clock work and has made me a lot of money this year. However, you need to do the work and come up with the rules that work for your market. I studied the book. I studied the idea. I modified it and it works. Like anything else there is some chop here and there, but it catches major trends. The above is intra-day. I'm not going to share the time frame or the settings. That is up to you.
I think we should give Darvas due credit, along with the "Market Wizard" traders. They found methods that worked during their day, risked their capital and fully exploited their edges. In hindsight, we can say "those were the good ol' days, when simple trend-following and breakouts worked." In reality, only a few people realized this and capitalized on it. I can't really say if Darvas's method works on swing or position trading stocks today. (It was never designed for intraday futures, so that's a moot point.) My hunch is that it generally doesn't, but perhaps it still does if you filter it properly or identify the right sectors to apply it.
From the et book reviews posted by kohlhofers April 13, 2006 4:34 AM Relevant Original Content Insightful Clearly Written Worth the Money Back in the 1960s an American nightclub dancer called Nicholas Darvas wrote a book called How I Made Two Million Dollars in the Stock Market. The book told of how the dancer - while pirouetting on the dance floors of the world's most fashionable nightspots - amassed a fortune between engagements by using a simple system. He described it as the `box system'. Copies of frantic cables between Darvas and his stockbrokers were reproduced, showing the companies he was dealing in, the price paid for the shares and the price at which they were sold. There were also heated conversations between Darvas and various film stars of his acquaintance, wanting to know more about his great gift as a stock market speculator. The book combined the razzamatazz of showbiz, the glamour of Hollywood, the nightlife of the international jet set and a formula for quick, easy riches. Woweeee! What a formula for a best-seller! Indeed it was a best-seller, appearing week after week and month after month at number one in the book charts. Millions of copies were sold all over the world to the financially washed, the financially unwashed and the financially unwashable. The book fired the hopes and imagination of millions of people in the United States and elsewhere. In their eyes, with a judgment totally undeflected by thought and reason, Nicholas Darvas was the new Messiah of the financial world, willing to spread the commandments which would bring great riches to all who followed. Darvas had found the touchstone - the Midas touch - which was within reach of anyone able to count and perform feats of simple arithmetic. The subliminal promise of the book was that anybody could make a fortune in the stock market. After all, if a nightclub dancer could do it by spending a few minutes a day on the telephone between jaunts of terpsichore, even a migratory fruit-picker should be able to do it by sending hand signals from a tree. So, in the 1960s, yet another myth was added to help fertilize the seeds of mania that were already sown. Of course, there were a few who could still remember the Crash of '29. But they were mere grains of sand on a beach of billions, ready and willing to be mesmerized by the allure of easy riches, as their ancestors had been so many times before. Not too long after Darvas's book was published, a public inquiry was instigated by Louis Lefkowitz, then US Attorney General. The purpose of the inquiry was to ascertain the validity of the claims made by Darvas, given the influence the book was exerting over what could be a dangerously gullible public. The investigation strongly indicated that the overall claim of the book could be totally fictitious. There seemed to be considerable falsification by omission. While Darvas proudly wrote of the profitable trades he had made, the investigation revealed a number of loss-making trades made by Darvas which never appeared in the book. If the loss-making trades made by Darvas - which never appeared in the book - were deducted from the profit-making trades - which did appear in the book - it was difficult to see how Darvas had made 2 million dollars in the stock market ... if he had made anything at all! Furthermore, the 'box system' which he claimed to have discovered bore a strong resemblance to a system advocated by the king of all speculators, Jesse Livermore, in his one and only book, The Livermore Key. One of the reasons that Livermore took his own life was the fact that the methods outlined in his book were no longer feasible in the United States following the introduction of the Securities and Exchange Commission and the imposition of various restrictions on share dealings. By the time How I Made Two Million Dollars in the Stock Market was published, people had forgotten all about Jesse Livermore. Livermore had become the anti-hero of a bygone era along with the Crash of '29. After studying the findings of the Darvas investigation the Attorney General launched a criminal action against him, alleging that certain statements he had made were fraudulent. Darvas's legal advisers countered with an action against the Attorney General and the United States for defamation of character. Lefkowitz decided the public interest would not he served by embarking on a long, tedious and complicated trial that was likely to give Darvas even more attention than he had already received. He therefore decided to drop the criminal action on condition that Darvas withdrew his action, giving an undertaking never to transact any type of securities dealings in the United States, or to become in any way involved in the US securities industry. Darvas agreed. He then left the United States to become an exile in Europe. Whether or not Darvas actually made 2 million dollars in the stock market has yet to he proved. It is a matter of public record, however, that he made several million dollars from the sale of his book. But by the time I met him in 1976 in the Dorchester Hotel in London, there was every indication that most of the royalties had been whittled away. There had certainly been no profitable share dealing using the `box system'. At the time, Darvas had very little to say about the stock market. By this time he was trying to make a personal comeback with a new book he was writing. It was called How to Be Your Own Doctor. We met on several occasions after that. The man fascinated me. l really wanted to know what made him tick! I've known several successful stock market operators over the years, all of whom shared certain characteristics. Darvas was a showman and a promoter of the highest order. But the qualities which comprise the successful stock market operator were nowhere to he found in my assessment of his character. A few months after our initial meeting Nicholas Darvas checked out of the Dorchester Hotel without leaving a forwarding address. It was to he several years before I heard the name again. The last occasion his name came up was the result of a telephone call 1 had from a firm of lawyers. It seems I have acquired a reputation as a central information bureau for every stock market operator coming in and out of London. The lawyers wanted to know if I could held them find Darvas. They had a bankruptcy petition against him. It was long overdue for service! Robert Beckman â Crashes, Why do they happen â What to do
I found this in the British Library newspaper section about 10 years ago and typed it up from a photocopy. I guess you can search for it on www.time.com now. Time magazine May 1959 p84-85 Business Pas de Dough The lights go low at Manhattan's garish Latin Quarter nightclub. Onto the stage glides a slim hipped, broad shouldered man in white tie and tails. He grasps his partner, a stunning redhead in black tights, whirls her over his head on one arm, hurls her dramatically in a split-legged fall to the floor. The dance team is Nicholas Darvas and his half sister, Julia, one of the top acts in the U.S. What the tired businessmen watching the show do not realize is that Hungarian-born Nicholas Darvas, 39, is a better moneyman than most of them; he is a top stock-market speculator who has has parlayed his considerable weekly income ($3,500 currently) into a fortune of more than $2,000,000. Moneyman Darvas' methods would raise the eyebrows of most Wall Streeters. Instead of studying the fundamentals -price earnings ratios and dividends-he judges public enthusiasm, a method that works best in volatile markets. "In my dancing I know how to judge an audience," he says "It is instinctive. the same way with the stock market. You have to find out what the public wants and go along with it. You can't fight the tape, or the public. Mental Charts. Darvas' system is tailored to his job. Since he has to do trading from wherever he is dancing (he recently completed an Asian tour) he ignores tips, financial stories and brokers' letters, has never been in a brokers office. Basically, his approach is that of a chartist; he watches price and volume. But the only charts he keeps are in his head. He studies the weekly stock tables in Barron's, receives a nightly wire from his broker giving the high, low and closing of stocks he is following, as well as the Dow-Jones averages. When a stock makes a good advance on strong volume, he begins watching it, buys when he feels that informed buyers are getting in. For example, when he was playing in Calcutta, he noticed E.L. Bruce moving up in the stock tables. Suddenly, on 35,000 shares it moved from 16 to 50. He bought in at 51, though he knew nothing about the company, and "I didn't care what they made." (they make hardwood flooring.) He sold out at 171 six weeks later. Darvas places his buy orders for levels that he considers breakout points on the upside. At the same time, he places a stop-loss sell order just below his buy order, so that if the stock does not move straight up after he buys, he will be sold out and his loss cut. "I have no ego in the stock market." he says. "If I make a mistake I admit it immediately and get out fast." Darvas thinks his system is the height of conservatism. Says he; " If you could play roulette with the assurance that whenever you bet $100 you could get out for $98 if you lost your bet, wouldn't you call that good odds?" If he has a big profit in a stock, he puts the stop loss order just below the level at which a sliding stock should meet support. He bought universal controls at 18, sold it at 83 on the way down after it had hit 102. "I never bought a stock at the low or sold one at the high in my life," says Darvas. "I am satisfied to be along for most of the ride." Limiting his selections to five or six stocks at a time, Darvas often studies one for weeks or months before buying. He steers away from blue chips, buys only growing companies. "I am only in infant industries where earnings could double or treble," he says. "The biggest factor in stock prices is the lure of future earnings. The dream of the future is what excites people, not the reality." Eight Hours A Day. Darvas studied economics at the University of Budapest, fled Hungary for Turkey in World War II (he still holds Turkish citizenship), methodically trained eight hours a day to become a dancer. He came to the U.S. in 1951, got interested in the market in 1952 when a Toronto nightclub owner paid him off in a mining stock that promptly trebled. (He sold it at that point; it later collapsed.) Darvas trained for the market just as methodically as he had studied his dancing, read some 200 books on the market and the great speculators, spent eight hours a day until saturated. two of the books he rereads almost every week; Humphrey Neill's Tape Reading and Market Tactics and G.M.Loeb's The Battle for Investment Survival . He still spends about two hours a day on his stock tables. Even though he has made a fortune he plans to keep on dancing. Dancing is his business; the stock market is just that second income.
www.stressfreetrading.com/index2.html is a Darvas system Momentum A.T.H. Volume spikes Concentration I think Livermore more or less traded the same way. Works great in bull markets.