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.
i don't think i mentioned it in this thread, but it's also worth reading his 1973 book, you can still make it in this market. wall street: the other las vegas is ok but if you've done any history of the market and corrupting influences, it's likely nothing new (or surprising). his otc book is of almost no value today because it was geared primarily towards the stocks which became the naz, NOT the pink sheet stocks of today, because the pink sheets generally don't have large share prices. i found his success book boring and not necessarily relevant.
Yes, Darvas works, but you have to understand how it works I will be doing a video on darvas box trading soon I use darvas with my trading every day! Along with other indicators I think you will understand how it works after seeing it in photos and such see in pic ,when you take out a resistance level in darvas you can get a large move
Sorry I forgot to post my you tube site http://www.youtube.com/user/TradePilotPro Take Care, Joe Baker
A main message from Darvas's book is: " stay detached and follow your proven system". Darvas's system was pretty simple, he called them boxes, but they are basically support and resistence. It also helps if you are trading in a roaring bull market as he was. He also had a strange idea of money management (he pretty much put all his money into three or four positions!).
I own the OTC book. It might not be of great value for its CONTENT, but it's a rare book, going for upwards of $700 when I last checked.
A weekly income of $3,500 (according to the Time Magazine article)! This was in the fifties, how much would that be in today's money? I sure will be very bold in the stock market. I mean, why should I care if I lose it all? Next week I'll have fresh $3,500 yet again to start my bold trades right at the middle of a bull market! He just had very lucky conditions.