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Nicholas Darvas toured the world as a professional ballet dancer.
All the while reading hundreds of books on markets/trading.
He turned that knowledge into the famous Box Method and made $2M in stock market profits.
Here& #39;s how he did it ... https://macro-ops.com/how-i-made-2m-in-the-stock-market-a-book-review-darvas/">https://macro-ops.com/how-i-mad...
All the while reading hundreds of books on markets/trading.
He turned that knowledge into the famous Box Method and made $2M in stock market profits.
Here& #39;s how he did it ... https://macro-ops.com/how-i-made-2m-in-the-stock-market-a-book-review-darvas/">https://macro-ops.com/how-i-mad...
1/ Darvas& #39; Early Days As A Losing Trader
Darvas did everything wrong as a beginning trader:
- Bought high and sold low
- Bought off "hot tips" from friends/family
- Turned his losing trades into "pet" investments
Lesson: Don& #39;t buy stocks based on hot-tips. Do you own work.
Darvas did everything wrong as a beginning trader:
- Bought high and sold low
- Bought off "hot tips" from friends/family
- Turned his losing trades into "pet" investments
Lesson: Don& #39;t buy stocks based on hot-tips. Do you own work.
2/ Darvas& #39; First System: The Seven Rules
Tired of striking out, Darvas looked to something *real*, something *tangible* ... like a stock& #39;s fundamentals.
By focusing on the fundamentals, Darvas developed these Seven Rules for trading.
The big realization: "Study the fundies"
Tired of striking out, Darvas looked to something *real*, something *tangible* ... like a stock& #39;s fundamentals.
By focusing on the fundamentals, Darvas developed these Seven Rules for trading.
The big realization: "Study the fundies"
3/ Darvas& #39; Date With Destruction
Using these rules, Darvas found (in his opinion) a *sure bet* stock. A company that couldn& #39;t *possibly* fall.
It met his criteria:
- Strong Industry
- Strong Rating
- 6% Div
- Low P/E
The result: He bet too big and lost a fortune!
Using these rules, Darvas found (in his opinion) a *sure bet* stock. A company that couldn& #39;t *possibly* fall.
It met his criteria:
- Strong Industry
- Strong Rating
- 6% Div
- Low P/E
The result: He bet too big and lost a fortune!
4/ Darvas& #39; Secret: The Box Method
Despite the blow-up, one of Darvas& #39; stocks did *really* well. In fact, it was a stock he didn& #39;t realize he had.
He bought it because the price was rising on strong volume.
It was then Darvas realized the power of price action and volume.
Despite the blow-up, one of Darvas& #39; stocks did *really* well. In fact, it was a stock he didn& #39;t realize he had.
He bought it because the price was rising on strong volume.
It was then Darvas realized the power of price action and volume.
5/ Box Method Cont.
So what is this box method, you ask? It& #39;s simple:
- Wait for a stock to consolidate in a trading range ($12-$15, for ex.)
- Buy the stock on a breakout from that consolidation (I.e., box)
- Place a protective stop-loss below the low of the breakout bar
So what is this box method, you ask? It& #39;s simple:
- Wait for a stock to consolidate in a trading range ($12-$15, for ex.)
- Buy the stock on a breakout from that consolidation (I.e., box)
- Place a protective stop-loss below the low of the breakout bar
6/ Managing A "Box Method" Trade
Once in a trade, Darvas took an unemotional view to the stock.
If it traded back into a previous "box", he would cut his position.
If it traded up into new highs, he would trail his position with a protective stop-loss.
He kept it simple.
Once in a trade, Darvas took an unemotional view to the stock.
If it traded back into a previous "box", he would cut his position.
If it traded up into new highs, he would trail his position with a protective stop-loss.
He kept it simple.
7/ Box Method Examples
Here& #39;s a few examples of the Box Method in action.
Note some common characteristics:
- Horizontal support/resistance levels
- Clear consolidation
- Strong breakouts into new "Box" zones
- Winners never test prior box
(disc: I own shares in TOBII)
Here& #39;s a few examples of the Box Method in action.
Note some common characteristics:
- Horizontal support/resistance levels
- Clear consolidation
- Strong breakouts into new "Box" zones
- Winners never test prior box
(disc: I own shares in TOBII)
