Nicholas Darvas, How I Made $2 Million Dollars In The Stock Market, And How You Can Do the Same With The Box System Theory!
The following blog post will be a quick review of the book by Nicholas Darvis, on how he used a special technical analysis factor, to make over $2 million in the stock market. The book starts out by talking about Nicholas Darvis life, and how he’s a dancer full-time. As a dancer, it seems like Nicholas probably is taking down, what would be the modern day version of about 40 or $50,000 a year. He travels the world, he grows on crew ships with his wife, etc. I got nothing against the guy, however some of the tricks he used to rig the market with his technical analysis theory, either seem like flat out lies made up to sell a book, or something that only worked in the 1950’s. In this blog post, I’ll argue why I am generally not a fan of technical analysis, and of why I think that Fundamental Analysis is probably the better way to go, especially over the long haul. The following blog post will look at Nicholas Darvas, and How he likely really made his money in the stock market, subscribe to our blog for additional details and information!
How Nicholas Darvas Really Made His $2,000,000.00 Off The Stock Market, By Selling Books!
Book, which is definitely very possible, or they seem like something that could only happen in the inefficient markets that was there at 60 or 70 years ago. You definitely cannot use Nicholas Darvis box system theory, in order to try and rig the stock market, and turn 50 to 100,000, into $2 million, inside of a few years. In today’s efficient market, especially when taking into account macro economic cycles, black swan events, and random swings of fortune, you cannot hope to make a long-term study return like he did.
The Nicholas Darvas Box System Theory
Before we wrap up this blog post, I’ll explain what Nicholas Darvis box system theory actually is. The gist of his box system theory, is that he believed stocks fluctuated inside of a certain box, but you could tell by looking at chart patterns, similar to those of the 50 were the 100 day moving average. To give an example, let’s pretend that AT&T stock is currently trading at $30. If you look at the last 52 weeks, which would essentially be something close to a 365 day moving average, if such a thing or two exist, then you’ll likely see that AT&T has fluctuated between 25 and $35 a share, during that year. Nicholas Darvis believes that what you can do with this information, is check the volatility in the chart patterns to see how this moves. So let’s say typically after the stock moves from $25 up to $30, it has fallen back down to $25, you can assume that it is in the lower part of one of its boxes.
I wanted to add a disclaimer on the Nicholas Darvas box system theory before we go any further on this blog post however. First off, his total profits were not $2,000,000.00 in the stock market, a large percentage of this was principal income from his job as a dancer. However, another thing to keep in mind is that that $2,000,000.00 inflation adjusted or market adjusted is worth something closer to like $10,000,000.00 today, which is no mean feat indeed. I would use this system of stock trading with the utmost caution, as I am much more of a buy and hold and an index fund investor, this system of investing is literally just a made up technical analysis factor that for all we know relied heavily on luck 30 or some odd years ago. I personally only typically use technical analysis in my trading in conjunction with firm fundamentals to reduce the risk of loss, and generally speaking would probably not recommend anyone use this strategy as their primary mode of investing.
Final Thoughts on Nicholas Darvas, How I Made $2 Million Dollars In The Stock Market and How You Can Too
You can then buy the stock at $25 a share, and wait for it to move back up to $30 a share, and then cash out and take your profits. Will you could also do from here is wait to see if it grows out of its next box. For instance, if you deduce that 31 is a signal that it is moving to a $35 per share box, you can either continue to hold the stock, or you can sell out place a new position at $30, and try to ride it up to $35. From here, you can test your theory and whether it’s right or wrong. As much as I think this is a really cool type in one else’s factor, it is one that is purely made up, there is no sound evidence on this, and I still am on mine to say that technical analysis does not work. Even the great Nicholas Darvis, who wants me to million dollars in the stock market, does not have a magic formula. Hold an index fund, and go on with life.
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