The Gambler

The author, Nicolas Darvas, was a professional dancer. In 1952, he was proposed to dance in a Toronto nightclub for which the payment was to be made in the form of stocks of Brilund company in the Canadian stock market. Unable to perform, he still offered to buy 6000 shares of the company at 50 cents as a gesture. He forgot about those shares and after two months, when he checked, he was surprised to see the stock price at $1.9. He made a profit of approx $8000 unintentionally and that’s how his journey in the stock market commenced.

Impressed by this profit; he decided to invest more in the Canadian stock market. Being a novice in the stock market, he started taking advice from every second person, about which stock to invest in. But what came next was a period of absolute failure. He kept hopping in and out of 25 to 30 stocks. Even when he made profits, he incurred an overall loss because of the brokerage charges he didn’t account for.

Thereafter, he decided to seek help from financial advisors and his brokers. Many times he did get lucky but by the end of 1953, his $11000 was down to $5800. He then moved to New York and started looking over the New York stock exchange. This made him gain interest in Wall Street and he decided to sell all his stocks in the Canadian stock market.

Takeaway: Perseverance is the foremost requirement for success in the stock market. One must be determined not to quit and must be willing to spend years if required to win in trading.

Developing a system and method that matches your personality and risk tolerance is not the only part of the process. Trading the right system at the right time in the right market environment is also important.

Instead of getting emotionally attached to a particular stock, focus on trading the price action only. Making some money in a particular stock does not mean it will keep rewarding in the future as well. It is also exhausting to be emotionally moved by each trade.

A successful trader does not trade stock tips, they trade methods and systems. 

To be successful in the long run, let your winners run long because profits are needed to pay for the small losses. 

Subscription to any advisory service must have entries and exits for each trade along with position sizing guidance and the recommendations must match your trading method. Choose carefully because very few are useful and measure up.