# Darvas



## ceasar73 (20 June 2009)

HI all.
Im reading Darvas' book at the moment..'How I made 2 mil', great read BTW.

Can anyone tell me what ever happened to Darvas? Why at a young age, when at his peak, did he stop at 2 million?..or did  he?

cheers,

ceasar73.


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## ThingyMajiggy (20 June 2009)

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


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## ceasar73 (20 June 2009)

cheers, but Id really like to know why he stoped at 2million, when in his prime?


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## tech/a (21 June 2009)

He wrote a book about it.

What happens to all these writers.
Weinstein/Williams/Prector/Miner/Greenblat/Duplessis/VanTharp/Douglas/Steidlmayer/even Guppy.
Or all of those in Shwaggers "Market Wizards".

You don't hear about these people time and again for their trading gymnastics.

If you CAN trade then people will beat a path to your door--many many people.
Volatility in education if you have and can maintain a proven track record will be almost inperceivable.
The money is incredible.

I remember years ago going to a seminar on some Software---I forget the name---it was clearly based on Stochastic divergence and M/A's. I was asked by a friend who was about to fork out $15K for it in around Y2000.
I took notes and asked some really sticky questions at the end.
So much so that THE AUDIENCE didn't want to see their guru pressured on an actually audited trading statement.Test results or a list of clients who have been profitable for 12 mths and could prove it!

There were 300 or so in the room.
I was heckled!!
As I walked out 15 or so people thanked me for saving them $15K but OVER 20 were lined up in front of 3 consultants desks to purchase the software.

And that DIDNT have a proven track record.

I use Tradeguider---a brilliant product--- coupled with sound M/M I do make a good profit over time. Last time they were in Asia I heard Gavin say they sold over 1000 R/T programmes at $2000 each in a matter of weeks.
Gavin and Sebastian and Co trade R/T accounts NOT with $100,000s but "Cleverly" with a few $1000 very often returning 6R on live eminis trades.
Ka Ching!
Piece of plastic disk and $2000 thanks!

Do the math.
Its not lonely either---everyone WANTS to part with their $$s--everyones your friend---or wants to be.
Sound business practice---to a willing and endless market.


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## ceasar73 (23 June 2009)

tech/a said:


> He wrote a book about it.
> 
> What happens to all these writers.
> Weinstein/Williams/Prector/Miner/Greenblat/Duplessis/VanTharp/Douglas/Steidlmayer/even Guppy.
> ...





hahahahaha..you were Heckled tech! what pricks!:
what are your thoughts on Darvas and his book?

cheers,
ceasar73


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## tech/a (23 June 2009)

Ceaser

Sorry I haven't been back to you earlier.
Busy!

Darvas is recognised mainly for his darvas boxes and of course his book How I made $2,000,000 in the Stock market.

The $2,000,000 is normally attributed to his boxes but if you have a good look at his works you'll soon notice his amazing returns came from aggressive pyramiding and money management.The Boxes were simply has anticipatory analysis prior to taking a trade.
So my opinion is his works are GOLD but not in the conventional sense.

I'm not a believer in diversification.
*Once you know how to eliminate risk *you can pyramid your brains out without to much to worry about.
As Darvas has shown it doesn't take a great deal.
$2,000,000 in 1959 is around 200 mill today--so a fair feat!


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## Uncle Barry (23 June 2009)

Good evening 
T/A.
Could you please help.
I have read and followed the Darvas concept for some years. 

My problem is, the only location to obtain a program/service is from Paritech.com.au
which I use a friends service for.

Is there any other program or service that includes the Boxes ?

Kind regards,
UB


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## beamstas (23 June 2009)

Amibroker if you have the code


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## tech/a (23 June 2009)

Paritech is only a data supplier.

There are any number of Software in which you can code Darvas.


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## Boggo (23 June 2009)

Below is a Darvas box formula for Metastock that I have, I don't use it so cannot help with its parameters.


LL:=If(L=LLV(L,5),L,If(Ref(L,-1)=LLV(L,5),Ref(L,-1),If(Ref(L,-2)=LLV(L,5),Ref(L,-2),If(Ref(L,-3)=LLV(L,5),Ref(L,-3),If(Ref(L,-4)=LLV(L,5),Ref(L,-4),0)))));
HH:=If(H=HHV(H,5),H,If(Ref(H,-1)=HHV(H,5),Ref(H,-1),If(Ref(H,-2)=HHV(H,5),Ref(H,-2),If(Ref(H,-3)=HHV(H,5),Ref(H,-3),If(Ref(H,-4)=HHV(H,5),Ref(H,-4),0)))));
NH:=ValueWhen(1,H>Ref(HHV(H,5),-1),H);
NL:=ValueWhen(1,L<Ref(LLV(L,5),-1),L);
Set1:=HHV(H,3)<HHV(H,4);
Set2:=LLV(L,3)>LLV(L,4);
Val1:=ValueWhen(1,BarsSince(H>Ref(HHV(H,5),-1))=3 AND Set1=true,NH);
Val2:=ValueWhen(1,BarsSince(L<Ref(LLV(L,5),-1))=3 AND Set2=true,NL);
Val3:=ValueWhen(1,BarsSince(H>Ref(HHV(H,5),-1))=3 AND Set1=true,LL);
Val4:=ValueWhen(1,BarsSince(L<Ref(LLV(L,5),-1))=3 AND Set2=true,HH);
Per1:=Input("max length",10,100,30);
RWH:=(H-Ref(L,-Per1))/(ATR(Per1)*Sqrt(Per1));
RWL:=(Ref(H,-Per1)-L)/(ATR(Per1)*Sqrt(Per1));
Pk:=Mov((RWH-RWL),3,W);
TB:=If(Pk>0,Val1,Val4);
BB:=If(Pk>0,Val3,Val2);
TB;BB;


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## tech/a (24 June 2009)

Thanks Boggo Id seen that before but only identifies small boxes.Parameters can be extended though I guess.

Even so
Darvas was in the end trading positions of up to $500,000.
Which I've never seen pointed out.
The steady and then exaggerated increase in position sizing had far more to do with reaching $2,000,000 than his boxes.

Again though
Most good strong and sustained moves come from consolidations as do from shallow and short term consolidations within a trend.

*Solution.*
Find a Rocket and keep adding fuel to it.


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## Uncle Barry (24 June 2009)

Good morning.
T/A and all many thanks for your information.

"Solution.
Find a Rocket and keep adding fuel to it."

This is the key to winning the game, however I never thought of it all, in the way you have just described it, 

And straight away, EXTRACT springs to mind, 
And I just happen to hold a few EXT, just a few 
Kind regards,
UB


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## tech/a (24 June 2009)

Yes and SFR is my current rocket.
Had that since 60c.

There is much chatter currently in other threads re Trading education.Exhorbitent fees and value for money,qualifications,experience and what it actually takes to "Teach" someone to trade.

Think you get my point here.


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## tech/a (24 June 2009)

This Darvas interview maybe of interest.
http://static.scribd.com/docs/7my4512c1deos.pdf


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## Uncle Barry (24 June 2009)

Good morning T/A.
I really don't think anyone can be taught to trade, be it short term or very long term or anywhere between.

How can someone be taught to control their minds as this must be the first step, surely ?
This control must only come from within, 
to over come and control 
Greed, 
Fear and 
Denial.

Programs only help with directions and suggestions, then the final command must come from the operators mind.

Control your mind, control your Bank balance, seems easy but isn't.
And now at long last I am partly in control of the above, after,,, lets say a few years.
(some think, my mind has been out of control for years  )

NOW........ if there was a program, or some easy way to learn to control the three master Factors, me thinks.. it would cost millions and would make everybody millions.

New or potential Rockets to add fuel to, just found one and fuelling up now on every weakness, in the s/p  (and my mind   )


ps, I look at these wonderful programs that will make someone money, and its not the person buying the program, its the seller of the program and the book of 'how to' !
If these great programs were so 'great' and could do all sorts of things, tell people when its crossed the line and now to sell, why wouldn't the builder of such a program keep the secret program to himself and silently make millions ?

Time to go and chase a dollar or three.
Kindest regards,
UB


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## wonderrman (24 June 2009)

Thank you for the link, I thought these two quotes were my biggest take away. 



> The gamblers are the people who buy and hope. Sure I traded big but ONLY WHEN all the right element pieced together. I could easily go months without a trade. I even went 2 years without making a trade. I have no “need” to lose money in the stock market trading any old stock. It either hits me right in the face as a great trade or I ignore it. AND when I am wrong I get out with a small loss. I never let my losses get out of control. How is that “gambling” or being reckless?






> “Have the markets changed” In short No. You see the markets are simply human emotion reflected in $$’s. People really need to get this into their heads. It’s not about logic. Company results. Mathematics but emotion. When emotion and logic collide. Emotion will always come out ahead. The way I traded in the 1950’s and made such fantastic money was simply the same method Livermore and Barauech traded before me. I traded the same way right the way through the 1960’s and 1970’s. And I am certain it will be the same going into the year 2000. It’s all about riding huge waves of emotion to the maximum. The big money is made from these moves. It’s crazy. But we are only human.




wonder.


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## ceasar73 (24 June 2009)

"Solution.
Find a Rocket and keep adding fuel to it." - well put tech...and thanks for the link, cant wait to read.

seems to me, once Darvas started doing the stuff below...he was well on his way

1. Developed Disciplined..He Followed his plan mechanically..always
2. Let his winners run (found rocket and added to it)
3. Cut his losses.

..great book BTW, best Ive read so far.

cheers,
ceasar73.


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## ajjack (24 June 2009)

Thanks tech/a for Darvas link, made my day.

For those interested, his books are still avail tho most
are out of print.  How I made 2M, and Other Las Vegas
are the 2 best.  The others are a bit slow and boring,
and difficult to find.  I had to buy on ebay from US.


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## kam75 (26 June 2009)

Based on what I've read, Darvas died in the 70's.  He was a legend and one of the few real market masters.  Invested in real estate too and and was successful.  I first read his book back in 2002.  Read it a number of times since then and everytime I read it, I learn something new.


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## kam75 (26 June 2009)

tech/a said:


> This Darvas interview maybe of interest.
> http://static.scribd.com/docs/7my4512c1deos.pdf




Come on, is that for real??  Who did the interview, Mark Crisp? I don't think so.  Darvas was interviewed by Time Magazine in 1959.  Still trying to find a copy of that story somewhere.


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## Mr J (27 June 2009)

tech/a said:


> *Once you know how to eliminate risk *you can pyramid your brains out without to much to worry about.




Eliminate risk? How so? I would love to see someone show an example where pyramiding doesn't bring a great deal more risk. I believe pyramiding is only correct when we're presented with subsequent entries that we would have taken anyway. Even then risk is greater, due to the trades being heavily correlated.


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## tech/a (27 June 2009)

Mr J said:


> Eliminate risk? How so? I would love to see someone show an example where pyramiding doesn't bring a great deal more risk. I believe pyramiding is only correct when we're presented with subsequent entries that we would have taken anyway. Even then risk is greater, due to the trades being heavily correlated.





You sure you dont want to take some time to REALLY think about it before I show a practical example?


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## Mr J (27 June 2009)

No, please show a practical example. By entering again, you are naturally assuming risk. Pyramiding is often understood as simply adding to a winning position. This is simply a reverse martingale. The additional entries must be +ev themselves, or in other words, worthy of being independent trades.


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## tech/a (27 June 2009)

Ok happy to do so.
I use 60 min charts in which to pyramid.
But you can use similar principals in any timeframe/s.
At no time do I pyramid into a trade where the addition of positions throws me lower than B/E on all trades.
Each trade is placed on its own merits and it is common for me to be stopped out of a pyramid position while the *initial position remains in profit*.
Its also common for me to close out a position whilst still holding other positions in the trade.
The end result is maximum result on $'s risked.

My increased position sizes range from 25% of the original trade to 300% of the original trade dependant on the trade being taken and the resultant maths with regard to risk.(Ie never exposing myself to risk beyond the initial trade risk---outlier moves accepted but not expected in taking positions).
I wont take pyramid trades if I cant trade all trades to B/E in the worst case scenario.If ever reached---and it does then all are closed out.

My live charts are at the office I dont trade from home so the example Id like to show is SFR---one Ive just traded.
I'll do it Monday night.
But I can show the principal on a daily chart sometime tommorow--(just about to jump on the Bike for 3 hrs then off to the footy!).

There are many creative ways you can jump on the rocket and belt the brains out of it without risking your house---infact more than your initial trade risk! To eliminate risk I ensure that I'm never below B/E on everything on the position.
Frankly if its flying I wouldnt care if most of my funds are in the one trade if the risk in the trade is no more than any other trade--on initial capital.


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## Mr J (27 June 2009)

Okay, we're on the same page, just looking at it different ways. You seem to agree that the additional trades are placed on their own merit (i.e. they'd be attractive trades on their own). Where we differ seems to be how we define risk. 

You seem to define risk from the starting point - if it fails and ends up breakeven, you believe that we have risked nothing. My perspective is that we have risked our original profit. Had we not made additional trades, we would have profited. Each additional trade we make has a chance of losing, and adds that risk to the overall position. There is also the fact that each trade of the overall position is highly correlated, which means that we are effectively trading a much larger size. This increases our risk of ruin. Proper pyramiding is extremely effective, but it does come at a cost.


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## tech/a (27 June 2009)

Mr J said:


> Okay, we're on the same page, just looking at it different ways. You seem to agree that the additional trades are placed on their own merit (i.e. they'd be attractive trades on their own). Where we differ seems to be how we define risk.




Yes



> You seem to define risk from the starting point - if it fails and ends up breakeven, you believe that we have risked nothing. My perspective is that we have risked our original profit. Had we not made additional trades, we would have profited. Each additional trade we make has a chance of losing, and adds that risk to the overall position.




Not interested in open profit.
Only interested in Open Risk.
Only interested in final R/R.



> There is also the fact that each trade of the overall position is highly correlated, which means that we are effectively trading a much larger size. This increases our risk of ruin.




If Catasrophic stop is limited to B/E as a minimum then other than outliers or slippage---we are no more exposed to ruin than a spread of trades with the same risk management.

A $1,000,000 position has no more risk than $1000 position at a B/E stop.



> Proper pyramiding is extremely effective, but it does come at a cost.




Happy to disagree on "proper" and cost.


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## beamstas (27 June 2009)

tech/a said:


> If Catasrophic stop is limited to B/E as a minimum then other than outliers or slippage---we are no more exposed to ruin than a spread of trades with the same risk management.
> 
> A $1,000,000 position has no more risk than $1000 position at a B/E stop.




Unless it gaps down 10% through your stop!


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## Mr J (27 June 2009)

> Happy to disagree on "proper" and cost.




I doubt it, since by "proper" I mean each entry being +ev. As for cost, are you suggesting there are no trade-offs with pyramiding?



> If Catasrophic stop is limited to B/E as a minimum then other than outliers or slippage---we are no more exposed to ruin than a spread of trades with the same risk management.




It depends. If we had closed each trade before entering the next one, our risk is less than if we had held through and pyramided. Our potential profit would be much smaller though. As I understand it, we're comparing two situations where the only difference is that one we ride each trade (pyramiding), and with the other we close each trade before opening the next?


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## ceasar73 (27 June 2009)

kam75 said:


> Come on, is that for real??  Who did the interview, Mark Crisp? I don't think so.  Darvas was interviewed by Time Magazine in 1959.  Still trying to find a copy of that story somewhere.




Why do you think its not real kam?


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## tech/a (28 June 2009)

Perhaps there should be a pyramiding thread?



> It depends. If we had closed each trade before entering the next one, our risk is less than if we had held through and pyramided. Our potential profit would be much smaller though. As I understand it, we're comparing two situations where the only difference is that one we ride each trade (pyramiding), and with the other we close each trade before opening the next?




Risk to open profit yes.
If your suggesting then that potential profit lost through pyramided trades which dont work out are not out weighed by realsied profits from pyramided trades which do succeed---then I dont have an answer---I simply dont have the reseach.

But there is much to this topic and an extremely important one which is NEVER visited.---well not that I have seen.

Are examples now required?

OH 
I agree with Kam looks a very sus artical!


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## Mr J (28 June 2009)

> Perhaps there should be a pyramiding thread?




There was one recently, I'll reply there.


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## kam75 (28 June 2009)

ceasar73 said:


> Why do you think its not real kam?




It reads like it's made up guys.  Just stuff from Darvas' Book itself.  Besides, Crisp was about 2 years old in 74 so he clearly could not have conducted the interview.

Now where the hell is that Time Magazine article.


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## pavilion103 (21 November 2012)

I haven't read through the entire thread yet, but I've just read the book for the second time (first time was one of the first things I ever looked at in relation to trading).

A number of his ideas resonate strongly with me and this is one of my favorite books. The one thing that really dawned on me is the fact that he was 'betting the farm' on one or two big trades. I know he had tight stops to limit risk, but this seems very risky to me and if there was some sort of catastrophic event could send him broke. 

Is this an accurate observation? What are people's thoughts on this?


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## AlterEgo (22 November 2012)

Well why not get the answer straight from the horses mouth? Nicolas Darvas did an interview in 1974 where he was asked this same question. Quote from the interview below:

Nick going through the book : “How I Made 2 million in the Stock Market.” It it's quite obvious that you took some enormous risks early on in your trading career. I mean, at one stage, you are trading your whole account, on 50% margin, and if it had have gone wrong. It's safe to say, you probably wouldn't be the position you are now. Some people might even call you a plunger and stock market got lucky. What would you say is that, how would you answer those critics?

NIC: Critics? You are talking about my trade in E.L Bruce..right? What can I say? Sure maybe in hindsight it was a bit a gamble but it sure paid off to the tune of $295,000 Everything seems so right at that time. The markets were strong. That stock price and volume action was fantastic. I had made enormous profits in Lorillard and Diners club just previous to this trade. I figured if I placed a tight initial stop loss I would only be losing a small percentage of these profits.

The gamblers are the people who buy and hope. Sure I traded big but ONLY WHEN all the right element pieced together. I could easily go months without a trade. I even went 2 years without making a trade. I have no “need” to lose money in the stock market trading any old stock. It either hits me right in the face as a great trade or I ignore it. AND when I am wrong I get out with a small loss. I never let my losses get out of control. How is that "gambling" or being reckless?


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## pavilion103 (22 November 2012)

Fantastic. Couldn't have asked for more than to hear it directly from him. Thanks mate


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## 5oclock (22 November 2012)

Yes it is a great read "How I made 2 mill", also got to agree with what TECH said about pyramiding about how it is not widely talked about or understood. Notice Nick Radge says in one of his talks that he personally doesnt  do it. One thing for sure its not for the inexperienced for the obvious effect of turning a potential good trade into a break even or a lose. If i remember correctly how TECH outlined his approach sounds similar to what i read in one of Daryl Guppy's books.


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## ceasar73 (15 January 2013)

The man is a legend.
Wonder why a film of his life story has not been made?
Best book I've read...its a must read.
ceasar73


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