Nicolas Darvas

Source: Forex News

Perhaps one of the traders with the most interesting backgrounds is Nicolas Darvas who actually performed as a dancer with his half-sister, Julia. Together they made one of the highest-paid dancing teams in show business in Europe and the United States.

Born in 1920, Nicolas Darvas fled Hungary in 1943 with a forged exit visa and only fifty pounds sterling at the age of 23. He spent a lot of time reading up on books on financial markets and speculations, including ABC of Investing by R.C. Effinger, The Stock Market by Dice & Eiteman, The Securities Market by B.E. Schultz, and Profit in the Stock Market by H.M. Gartley.

Career

Soon after, Darvas started investing in the stock market, eventually developing his approach. He made $2,450,000.00 in 18 months during the bull market of the 50s. At that time, his main criteria for selecting stocks was from Barron’s magazine which he had time to read while traveling with his dance troupe.

His stock selection method was called “BOX Theory” because he looked at stock wave price action as a series of boxes. Quite simply, when stock prices were confined in a box, he waited and bought when price moved out of the box.

He rose to fame at the age of 39 and wrote a book called How I Made 2,000,000 in the Stock Market.

Facts

In 1960, Time Magazine had exposed his story and claimed that the New York Attorney General said that his profits only amounted to $216,000. This criminal investigation was the first to be taken under state law that banned fraud or misrepresentation in investment advice. Darvas said that these charges were false.

Stock trading wasn’t as quick and efficient during Darvas’ time, as he would use cables and telegrams to send his buy and sell orders to his broker in New York. In the 1950s, Darvas favored trading stocks of companies in electronics, missiles, and rocket fuels, which were fascinating to the American public back then.

Greatest Achievements

Darvas’ first speculative purchase in the Canadian stock markets earned him a 200% profit. He was also known for turning a $36,000 investment into $2.25 million in a three-year period.

With his trading method, Darvas would narrow the stocks down to an industry list and watched for signs that price was ready to move, based mostly on volume.

One particular example is his Lorillard trade in which he noticed a volume spike and watched the stock closely by asking his broker to provide daily quotes. In 1957, cigarettes were considered a growth industry and Lorillard was selling Kent and Old Gold cigarettes. Darvas made a profit of roughly 60% on this trade over a span of six months.

Darvas shared more details on his trading methods in his subsequent books, The Anatomy of Success and You Can Still Make it in the Market. In one of his books, he also shared his venture into other fields such as the fashion industry, theatrical production, and real estate.

https://en.wikipedia.org/wiki/Nicolas_Darvas

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