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How I Made $2,000,000 In The Stock Market (平装)
by Nicolas Darvas
| Category:
Investing, Stock market, Investment |
| Market price: ¥ 148.00
MSL price:
¥ 138.00
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| Stock:
Pre-order item, lead time 3-7 weeks upon payment [ COD term does not apply to pre-order items ] |
MSL rating:
 Good for Gifts |
| MSL Pointer Review:
Greatly educational and entertaining, this investment guide first published in 1962 is still a constant resource of information and advice. |
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AllReviews |
1 Total 1 pages 9 items |
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Steve Burns (MSL quote), USA
<2006-12-31 00:00>
I rarely give 5 star reviews but this book was truly an enjoyable read that taught me a lot. Here are the key lessons:
1)ALWAYS have a stop loss order in place when you buy stocks, about $1.50 to $2.00 under your purchase price, this safeguards you against the huge losses people experience in a bear market.
2)Watch unexpected volume surges in stocks that push the price up, this is a sign that other investors know something that you do not. You can partner with insiders and people in the know with out knowing what is really driving the price.
3)Never sell a stock that is rising in price. Only sell on declines.
4)Watch price boxes that develop in stocks, if a stock is trading at $66 to $70 for 6 months then suddenly goes to $72 it is likely the sign of a new price range box, buy at break outs.
5)Take emotion out of trading and set your rules and follow them.
6)Stay away from the rumors and mob mentality of Wall Street, get your information from Barron's weekly and daily quotes, everything else just leads to confusion.
7)Watch stock prices and go with the patterns you watch develop.
8)Look for the break away stocks that will make you rich, trade the stocks that are at their 52 week high if they are growth stocks and if they appear to be breaking new highs.
Darvas has an entertaining writing style and gets to the point. 5 strong stars, this is great information to tie in with what can be learned from Warren Buffet, Benjamin Graham, Philip Fisher, William O'Neal and Jim Cramer. |
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Ashiwini Aragam (MSL quote), USA
<2006-12-31 00:00>
If you think you can get a sound-proof system from reading this book, you will be disappointed. There are some lessons learnt that Mr. Darwas shares - like buying on new highs, signs for HUGE volume buying, margin usage, selling automatically using stop order, not watching the market on a minute-by-minute basis, etc.
Mr. Darwas learns early that making the same mistake is one thing you should avoid. Keeping track of all his trades and re-visiting and learning from them is something all investors should do. The system of boxes that he refers to is never really clear, but if you know a bit about investing, you can relate it to support and resistance. One thing many investors don't do is to buy stocks hitting new highs; Mr. Darwas' experience clearly teaches you otherwise.
Staying close to the market, though with money on the sidelines, is a key factor for a successful investor. Mr. Darwas' sell-stop order system (often less then $2 from his original purchase price), helped him stay prepared for an upcoming downtrend. I haven't seen any instances in the past 10 years where a stock is halted from trading, because the demand was too high! Mr. Darwas was surely lucky to benefit from such a situation.
Listening to what the market tells (read William O' Neal) and not to the analyst is a key factor for a successful investment. Mr. Darwas was wise enough to implement the system - he ignored tips from brokers frequently and also finds out that working actively with those on Wall Street actually hurt his investment.
It is a very easy read (I read the book in 2 days) and will instill in you some basics of sound investing approach (buying on huge volume action, selling w/o taking too much of a loss, hanging onto a stock while rising and knowing when to sell, etc). But as far as a methodology, the rules aren't clearly laid out. For a relatively better set of rules, refer to books on CANSLIM investing, for example. If you have 4 hour flight, take this along, for $10, it will reinforce what you need to be a good investor. |
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G. Soos (MSL quote) , USA
<2006-12-31 00:00>
I am somewhat puzzled about how THIS book became a "classic". Mr. Darvas, "world famous dancer" with no training in stock trading starts out with a $3,000 investment in 1952 that would turn into a $2,250,000 fortune by July of 1959. All this was done via telegraphs from Saigon through Paris to New York to wherever else he was invited to perform. This process included some weird technicality called "stock-right bonus purchase option"; a desperate over-the-counter buying frenzy of a trade-suspended stock when short sellers made a bad call and some other exotic stories. Also, it should be noted that the author traded using various margins that significantly increased his leverage. (By the end he had more than $500k working capital along with a $3,500/week "regular" income.)
It is a hilarious, amusing story and you enjoy reading it till the very end, when you suddenly come to realize you must have had missed something. This book gives you very little factual knowledge about the Darvas system. In fact, the author had to attach an explanatory appendix to the end of the book, trying to clarify some quite fuzzy concepts (AND referring to his second book!). Reading the rest of the reviews here reveals that many reviewers read this second book from the author that attempted to further clarify the method.
But what is the method? Volume action? Price action? It is a "techno-fundamentalist approach", without any further explanation of what fundamentals are actually considered. (He refers a lot to reading this and that in Barron's...but what?) What is an "Expensive-but-cheap, high velocity stock"? And what is really "techno" about it? His "boxes"? You never figure out how he picked the successful stocks to begin with ("It began to emerge from the swamp of sinking stocks like a beacon...I was watching another stock whose action was fascinating to me...") Then, let's not forget that the author never fully explained his so called "feel" for some stocks and his "mental charting" techniques. Well, try to emulate that one! A little additional clarification of this instead of the 10 pages of (worthless) telegraph copies and those 7 extra, empty pages could have gone a long way.
Overall, this book is an entertaining read. And yes, the author was a real person, 39 years old at the time of his interview in the May 25, 1959 issue of Time Magazine. As far as classic, that title I would reserve for a book like Winning on Wall Street from Martin Zweig.
(A negative review. MSL remarks.)
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An American reader (MSL quote), USA
<2006-12-31 00:00>
Warren Buffet is richer, and Peter Lynch and George Soros are more well-known, but in terms of the capital gains he was able to make in a relatively short timespan (18 months), Nicolas Darvas is perhaps the greatest investor of all time.
That being said, this book shouldn't be taken at face value. It's very telling that the title is How I Made 2 Million Dollars and not, How YOU Can Make 2 Million Dollars. Neither this, nor any investing method should be trusted until you have had time to study it over time (I recommend developing an artificial portfolio over a period of several months, at least, using a spreadsheet and adjusting for commissions), and until you feel comfortable with it: Darvas' tales of his early losses should show just why that is the case. Another thing is that it is NOT based entirely on a price pattern in its methodology: Darvas was apparently blessed with some remarkable foresight into industries which had a high potential for future demand growth, which is what caused most of the spectacular upward trends he describes in the book. Unless you are able to analyze fundamental market characteristics in a similar manner, you may make some money, but you likely won't match his returns. He also noticed stocks that interested him by unusual surges in volume. Using Barron's or the Wall Street Journal, that would mean studying pages and pages of closing prices (with no charts) in order to qualitatively asses what the normal volume of a stock was...it sounds much more time-consuming than we might wish.
Still, the best thing that this book ever did for me was that it made me curious about what kind of profits a person could expect to make in the market. I decided to investigate this method (and I'm still doing that) to compare it against others, and hopefully it'll do the same for you. |
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An American reader (MSL quote), USA
<2006-12-31 00:00>
Nearly everything has a crude origin and, as time passes, becomes refined and developed. Mankind didn't start communicating by beaming an email to the other side of the country in a matter of seconds, rather, we used horse-bound messengers and slow-moving trains to make contact with others in distant places. Mankind didn't begin by driving to a restaurant and ordering a steak but rather, by going out and growing or hunting down food and cooking it over an open fire. Likewise, investors did not begin trading by typing a ticker symbol into a software program and picking a buy point on a bar chart based on well-established technical analysis patterns, rather, they bought stocks based solely on fundamental analysis.
After years of losing money in the market by taking others' advice and by using fundamental analysis as his sources for picking stocks, Nicolas Darvas developed technical analysis theories based on volume and price movement. Thanks to people like Darvas, who use their creative thoughts to question well-established principles when they believe them to be incorrect, traders now have a greater understanding of how to use technical analysis to make money.
In How I Made $2,000,000 in the Stock Market, Darvas describes how he would follow stocks and watch them bounce inside "boxes" of various shapes and sizes. Darvas would buy stocks as they were moving out of the top of their box and he would sell stocks if they fell out of the bottom of their box. Some of the other major lessons that Darvas learned during his journey to success include:
- Only buy stocks that are in a consolidation, or better yet, focus only on stocks that are breaking out of a consolidation area.
- Always place stop-loss orders just under the bottom of the consolidation area and use trailing stops to lock in swiftly made profits.
- Develop your own successful system based on principles you know to be true and which you have confidence in.
- When you find a system that you believe in and which is successful you should not allow others to influence you. Stick to your proven, successful plan and don't be influenced by others.
- Traders should focus on only a few stocks. Darvas traded no more than 3 stocks at a time and his account was well over $1 million.
- Volume spikes on up days indicate that there is a large interest in the company and that future advances are likely.
How I Made $2,000,000 in the Stock Market by Nicolas Darvas is an entertaining and thought-provoking book about how a man with no background in business (Davis was a professional ballroom dancer) used his own trading system based on technical analysis to turn $10,000 into more than $2 million by focusing on price action. This book is a great read for students of trading or for people who enjoy the burst of hope that often accompanies reading about the success of others. |
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Alexander Chambers (MSL quote), USA
<2006-12-31 00:00>
This is a truly great book! I had been aware of the importance of having a trading system to "protect" you against the emotions of stock trading for a while now. 90% of people lose money in the market. Why? Because they try and predict stock prices and get emotionally involved. They also do not know how to read entry and exit signals.
Darvas was a dancer in the 1950's who invented a completely unique stock trading system - one which still stands tall today. His system automatically sold him out of bad markets but let his profits run with rising stocks. He gave up trying to predict the market and decided to actually follow the market and let it dictate when to make a move either way. This way of working changed the emphasis of his making large losses into his making of even larger gains ($2 MM in 18 months - probably $10 MM in today's money!). The book outlines the system he successfully used.
It is, however, difficult to tease the system from the text. Darvas writes well but you have to read the book several times understand all the nuances of his system. Even then, after four readings I had some questions. If you're serious about making money in the market or are fed up losing money, you really need to read this book. If you're not fed up of losing money, you must be mad!!!
Searching on the net for more information on how to construct Darvas Boxes (essential to his system) and screen for winning stocks led me to an updated version of Darvas' system. I highly recommend this system as an adjunct to the Darvas book. It elaborates on the principles outlined in this book and gives you all the tools you need to screen for the type of stock Darvas was interested in - on the Internet! Screens for stocks that have 200% increase in volume, are near their all-time high and have good earnings are all part of the package. Automatic plotting of Darvas boxes is also included.
I found after reading both the Darvas original book and the system [...] my stock picking has now made me some money. Why not start right here and do the same? |
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Pavel Peev (MSL quote), Bulgaria
<2006-12-31 00:00>
I ordered this book and read it with eager anticipation. However, I still haven't made money with it. And I'm planning to use it on FOREX, not on stocks.
In the beginning of the book, the author points out mistakes that I actually have made. So that got me interested because I agreed with the author.
Then he talks about his box system. The idea is that he abandoned any fundamental analysis and just looked for stocks that (for unknown reasons) happen to be STEADILY (day after day) rising in price. The strength of Darvas'es system is not in some special indicators, but in trading WELL BEHAVED stocks.
Here is what I like about the book:
1) He doesn't use ANY technical indicators, not even a moving average. He just uses "boxes" - trading ranges, defined by support/resistance lines. No moving averages, no MACD, no Bollinger bands... nothing! Just volume and price ranges ("boxes"). Because he doesn't use indicators, his system is simple.
2) It's very humorous that he advises to trade long term, and not trade short term ("don't jump in and out of the market like a grasshopper"). I agree with him. On the short term charts, the profits are smaller and the trader needs to spend more time monitoring the trade.
3) I believe that his "box" system can be used in the FOREX market, for example trading the GBP/USD on the 1 hour chart.
4) The book is funny and he even talks about his girlfriend Julia, who
Here is what I don't like about the book:
1) He doesn't talk about the FOREX market. This is because in Darvas's time, the FOREX didn't exist yet.
2) He is saying that the London Stock Exchange doesn't provide enough information to be used with his system. This is old information, because the London Stock exchange does provide enough information now.
3) He believes that volume breakouts can help you find stocks that will go up. However, I don't think that volume is a very strong indicator. (And in FOREX there is no volume data available).
4) He states that if you have less than $5,000 you shouldn't get started trading. This is old news. There are mini accounts, both FOREX and CFD, where you can start with only $500, or even less.
5) The book is an autobiography, not a trading tutorial.
Overall: buy and try this book. But I personally will apply it on the FOREX market, because the FOREX gives me more leverage, liquidity and 24 hr trading. I just "made" more than 700 pips on a GBP/USD long trade. But it is only in my demo account for now. Hopefully, when I'm fully confident, I'll do it with real money. |
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J. Roberts (MSL quote), USA
<2006-12-31 00:00>
This book follows Mr. Darvas' path from being a professional dancer to him becoming a successful investor using what he refers to as a "Techno-Fundementalist" method.
I found this book to be an informative introduction to the subject as well as rather entertaining. What I found to be especially compelling was how the book takes you through the evolution of this trading method. The mistakes made along the way have just as much value as the actual method itself. I very much recommend this book to anyone interested in the more mechanical techniques of investing.
The only real caution I would have to people who are interested in this book are as follows:
1)This book was written in the 60s. The stock market has changed considerably in that time. The concepts of the book are still applicable, however the market (especially the rules of the SEC) and situations that Mr. Darvas was investing in have changed.
2)Mr. Darvas lost over $100,000 dollars (in late 1950s dollars) before he made his riches. Furthermore, he made his 2,000,000 primarily through 4 or 5 stocks. Many of his trades actually netted him a loss. Please don't buy this book if you are looking for the magic bullet of investing. Like the title of this review says it is a good introduction. I would recommend further reading on the subject before you start using this method with your own hard earned dollars. |
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Kevin Kingston (MSL quote), USA
<2006-12-31 00:00>
Amazingly the techniques Darvas stumbled on in the 1950's are still very much used today to identify stocks that are starting a big move. William Oneal of IBD (The Newspaper) is an advocate of a very similar system, (CANSLIM).
This book actually gave me the push I needed to write my book, a similar story about oversized gains in the real estate market, A 20,000% Gain in Real Estate: A True Story about the Ups and Downs from Wall St. to Real Estate, by Kevin Kingston.
Darvis has a fun way of walking you through his escapades, that span the globe while trading the market with his box system via telegrams from his Wall St. brokers. He actually forbids his brokers from calling him because he did not want emotion to play into his decisions. He wanted to let the technical action speak for itself which worked out fabulously for him. There is also an important message to learn from this.
His travels take him from Hong Kong to Istanbul, Rangoon, Manila, Singapore, Stockholm, Formosa, Calcutta, Japan and many other places, all the while he is trading larger and larger positions with one or two telegram at the end of every day.
You can definitely learn lots from this book and be entertained along the way.
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