Taking $25,000 to 2 million in 18 months

Discussion in 'Professional Trading' started by Port1385, May 8, 2009.

  1. If I gave you $25000 and told you to take it to 2 million in 18 months, could you do it?

    Now lets say I gave you a few handicaps. You could not look at live quotes or any television news service. You could only go by written financial news.

    You would have access to no computers. No charting software. I would give you some graph paper and a pencil if you like.

    All of your research had to be done during non-business hours meaning that your time would be limited to a few hours each night for research.

    You would trade only by telephone basically calling a broker. You would have to pay at least 50 bucks for each trade through the broker.

    You could only call the broker once per day and at the time that I dictated at random. Sometimes there might not be access to the broker for a few days at a time.

    Now lets give one extra handicap. I will place you back in the time period from 1957-1959 when you would have to deal with whatever technology and information they had back then.

    Could you still do it?

    It has been done. Nicolas Darvas took 25000 to 2 million in the course of 18 months under these conditions.

    I found a few articles about Nicolas and this should be an interesting read for all...


  2. sjfan


    Except, I don't think there are verifications of his performance. If there is, I'd be interested in seeing it. I'm not doubting that it exists, just that I've heard this claim many times before and no one has ever been able to show that this fella actually performed as he claimed.

    Think of it this way, if something came on ET today and claimed any of those things, we'd (rightfully) send him off as a snackoil scammer.
  3. Here is an excert from the article...keep in mind this article is from the year 1959.


    "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.""
  4. The Attorney General of NY at the time verified about $250,000 in profits, but could not verify the rest. Nicolas did have brokerage accounts in a few countries so the AG did not have access to them all...
  5. I would gladly accept your challenge provided that everyone else also returns back to the days of the Flintstones.
  6. There was a lot of "in house" chatter about him. A free bound book followed. Later it was turned into a publication that could be purchased.

    Trading then was exactly like the challenge posted here in ET.

    Brokers, at the time, were totally unaware of how to do trading.

    We had a group of about 8 or 10 who traded at that time and we all had accounts at the same brokerage. I never set foot in that brokerage, but when I left it, I did drop in at the second firm I used.

    I still have blank copies of the 11 by 17 charting paper I used once it was possible to print it. Originally we all used brownlines that were made on blueprint machines.

    There are tons of reasons why you view Darvas and skilled traders the way you do. He would easily understand what and why you have the personal difficulties you do.

    People who could trade in those days the way he did were not respected then and they were also curiousities simply because of the prevailing standard of what was/is possible.

    Darvas had an open mind and through fundamental analysis, he was able to see price cycles that represented and defined the envelope of price range. Using a straight edge on a daily chart easily defined the range and period of cycles.

    Well before Darvas, there were books that stated the relationship of the variables and their periodicity. One was the 4th Ed of Magee. Then, you did not have to read past page 7 to understand what Darvas understood and deployed.

    Today, compared to then is very different. Then, Peter Gabriel Bergmann reigned in NYC on the Manhattan Project and he spent two days a week at IBM where he taught the very talented of IBM Theoretical Physics. Several of us (the traders mentioned above) were in those classes in 57-59, etc. We would have not given 30 seconds to using the state of the art computers to do stats on markets.

    Making money in those says involved the same cycle it does today and the same range of values in the cycle.

    Attending B school then as now doesn't get the job done. the culture remains the same. At your Alma Mater in Philly, whether it be Temple, Drexel or Penn, students don't "get it" vis a vis Darvas and making money by extracting the market's offer. My vantage point at Wharton was from an Adjunct Prof point of view and only Graduate Studies.

    The financial industry's culture is more like the C+ History Major turned Grad student through family connections. Darvas was a dancer by profession or avocation; he could afford anything. Obviously he saw clearly and simply the rhythm of the markets. Pencilling in the price range and market periodicity was a snap then as it is today.

    You can look at the prime drivers of the financial industry and see that sales is the driving function. Commissions and fees are what is paid to the people who meet the public.

    In the past several years, we all got to see the "quant era" come and go (mid '80's to around 2006). There is a guy here who wants to start a "quant" forum. See feedback. You can read all about NN's and GA's anytime you want here. Darvas would just smile.

    You can't imagine what it is like to give a broker the experience of making a turn that nets low 7 digits and leaves low 6 digits on the table becaus the broker couldn't calculate 10% of the cumulative volume throughout a given day to complete block trades @ the T&S block size. At least they learned how to highlite 31 trades on T&S print and do a Fed Ex.

    Maybe you need to, at least, get trained up by someone you could do executions for.

    Darvas used telegraphs (Western Union) to his broker to get executions. Could you handle telegraphed instructions and get the trades done?

    Trading is very different than the sales oriented world you are employed in. Traders use guys like you, after they train them up, to make phone calls to the trading desk to get their bidding (meaning do what you are told) done.
  7. Loki


  8. Yes, we could do it - like Nicolas Darvas. But only in a strong bullmarket...
  9. The market trades completely differently today due to the advent of live quotes and financial news.
    #10     May 9, 2009