Mr. Nicolas Darvas

Biography

Nicolas Darvas was a Hungarian-born professional dancer, author, and self-taught stock trader. He traveled internationally as part of a successful dance partnership while developing his interest in financial markets. Without working professionally on Wall Street, Darvas developed his own stock-selection and trading system. He became widely known after publishing his book How I Made $2,000,000 in the Stock Market in 1960.

Trading Methods

Darvas developed the Darvas Box Theory, a technical trading method based on identifying stocks moving within defined price ranges. When a stock broke above its established trading range, accompanied by strong market activity, he considered it a potential buying opportunity. His approach emphasized rising stock prices, trading volume, momentum, and predefined exit levels. He preferred stocks demonstrating strength rather than attempting to predict market bottoms.

Greatest Successes

Darvas claimed to have turned a relatively modest investment account into more than $2 million during the late 1950s, primarily by trading growth stocks. His account of these trades became the basis of his bestselling book. Although the exact results are based largely on his published account, his Darvas Box method became influential among momentum and breakout traders.

Failures and Setbacks

Darvas experienced unsuccessful trades and financial losses while experimenting with stock tips, market rumors, and different trading approaches. He gradually concluded that following other people's predictions was less reliable than using a consistent method. His experience illustrates how false breakouts, excessive trading, and emotional decision-making can damage investment performance. His published success claims should not be interpreted as independently verified results.

Lessons for Modern Traders

• Look for stocks showing strong price momentum.
• Use clearly defined price ranges to identify potential breakouts.
• Establish exit rules before entering a trade.
• Avoid relying entirely on rumors and market tips.
• Keep a record of trades to identify mistakes and improve decisions.
• Recognize that even strong breakouts can fail.