How I Made $2,000,000 in the Stock Market by Nicholas Darvas
Two Million Dollars
Darvas asked his brokers to send telegrams after the market closed. He kept away from all financial commentaries. As prices began to fall, he chose to sell Universal products and made a profit of $409,356.48.
Now he had a huge sum to invest and he did it in Texas instruments at the following prices –
He then profited $862,031.52 from Thiokol. He invested in Zenith Radio,Fairchild Camera, Litton Industries, and Beckman Instruments to get a fair idea of these stocks.
After observing these, he moved on with ZenithRadio and Fairchild Camera. His transactions were-
On June 9th, the author received the quotes of his stocks. He compared it with the previous day's quotes to find that his holding appreciated $100k in that single day.
He had to leave New York for his professional commitments. Before going, he found that if he sells his stocks, he will make over $2,250,000. That is how he finally made $2 million in the stock market.
He felt pleased because he was doing what he liked. He worked while Wall Street slept.
Takeaway- Discipline to stick with a winning system will determine success in trading over the long term.
A pure Darvas system trader has the benefit of not having to watch the live market. The essential principle here is not to get entrapped in the intraday fluctuations of stock prices but to look at the longer-term price action and trend.
Another key characteristic of the Darvas system is not to be sold out until the stop loss or trailing stop is hit.
The winning system of Nicolas Darvas’ includes entering trades that break out of price boxes. If it retraces back under the breakout, sell for a small loss and if it keeps going up, let it run with a trailing stop under rational past price support. This results in big winners and small losers if the market is in an uptrend.
These are the principles of the Darvas method:
- In an up-trending market buy a rising growth stock as it breaks out of a conventional price range to all-time highs and let it run as far as it will go. Do not use a price target to sell, instead sell only when the stock reverses and stops out by losing short-term support.
- While winning with a rising trending stock, add more shares early in the move.
- Always have a stop in place to lock in profits and get out of Darvas stock while it is near all-time highs but loses short-term support levels.