Nicolas Darvas has one of the most inspiring stories as a trader, taking a couple thousand to over $2,000,000 in only a handful of years (all while being a professional dancer!).
Here are the 20 most impactful quotes and lessons he picked up along the way:
Here are the 20 most impactful quotes and lessons he picked up along the way:
1. “I had decided never again to risk more money than I could afford to lose without ruining myself.”
The greats only became great through their constant adherence to proper risk management principles. Darvas was no exception.
The greats only became great through their constant adherence to proper risk management principles. Darvas was no exception.
2. “If I studied price action and volume, discarding all other factors, I could get positive results.”
The best trading is simple.
Price & volume are the only two indicators you need.
The best trading is simple.
Price & volume are the only two indicators you need.
3. “It was not easy. I sat with my stock tables for hours each evening, trying to find another stock like it.”
Becoming a successful trader is not easy.
You must put in the work, preparing diligently.
Becoming a successful trader is not easy.
You must put in the work, preparing diligently.
4. Darvas' realizations:
1. I should not follow advisory services. They are not infallible, either in Canada or on Wall Street.
2. I should be cautious with brokers’ advice. They can be wrong.
3. I should ignore Wall Street sayings, no matter how ancient and revered.
1. I should not follow advisory services. They are not infallible, either in Canada or on Wall Street.
2. I should be cautious with brokers’ advice. They can be wrong.
3. I should ignore Wall Street sayings, no matter how ancient and revered.
5. “I realized that I would not be able to sell at the top. Anyone who claims he can consistently do this is lying. If I sold while the stock was rising, it would be a pure guess, because I could not know how far an advance might carry.”
Darvas traded with a dollars mindset.
Darvas traded with a dollars mindset.
6. "I tried to detect those stocks that resisted the decline. I reasoned that if they could swim against the stream, they were the ones that would advance most rapidly when the current changed."
Relative strength was as key in the 60s as it is now.
Focus on it.
Relative strength was as key in the 60s as it is now.
Focus on it.
7. “It was evident that I had bought the right stock at the wrong time.”
Your stock selection can be perfect but buying at the wrong time does you no good.
Make sure the technicals corroborate the fundamental story.
Your stock selection can be perfect but buying at the wrong time does you no good.
Make sure the technicals corroborate the fundamental story.
8. "What I had to do was to find stocks that would be hoisted up because they stirred people’s imagination for the future."
Life-changing returns usually come from life-changing companies.
Life-changing returns usually come from life-changing companies.
9. “No bouncing, no movement, meant it was not a lively stock. And if it were not a lively stock I was not interested in it because that meant it would probably not rise dynamically.”
Our money is important. So is our time.
Don't put either into a dead stock.
Our money is important. So is our time.
Don't put either into a dead stock.
10. “If my stop-losses had not taken me out of the market I could have lost about 50% of my investment.”
The importance of risk management never goes unnoticed by the greats.
The risk of ruin in the market is high. Mitigate this risk with proper discipline and rules.
The importance of risk management never goes unnoticed by the greats.
The risk of ruin in the market is high. Mitigate this risk with proper discipline and rules.
11. “My experiences with similar stock movements in the past told me that it was being accumulated. I felt I had the right stock. Now it was a question of getting into it with more money at the right time.”
Use your past trades as a road map for future ones.
Use your past trades as a road map for future ones.
12. "I did not like the trend, but I knew it was no use trying to fight it."
This short quote is important – so often traders focus on their beliefs & why they think their opinion is correct.
Our opinions don't matter, the only thing that does matter is the prevailing trend.
This short quote is important – so often traders focus on their beliefs & why they think their opinion is correct.
Our opinions don't matter, the only thing that does matter is the prevailing trend.
13. "But I soon discovered that working on paper was quite different from actual investing. It was like playing cards without any dollars in the pot. It had as much savor and excitement as bridge at an old ladies’ home.”
Learn how to trade real money as soon as possible.
Learn how to trade real money as soon as possible.
14. “The major problem still remained; what was the right time to buy into it? Logically, it was the moment when it entered a new higher box."
He knew the best time to buy was through this pivot point - when demand outweighed supply.
No use buying any time before the pivot.
He knew the best time to buy was through this pivot point - when demand outweighed supply.
No use buying any time before the pivot.
15. “I felt all my study and worry over the past few years had been worth it. I was beginning to come out on top.”
Appreciating the mundane, minute tasks of day-to-day trading is tough but worth it.
The market is hard, stick with it.
Appreciating the mundane, minute tasks of day-to-day trading is tough but worth it.
The market is hard, stick with it.
16. "I reasoned that if a stock has fallen from 100 to 40, it will almost certainly not climb up to the same high again for a long, long time."
Don't get attached to a prior winner if it shows major distribution.
Chances are it isn't coming back.
Don't get attached to a prior winner if it shows major distribution.
Chances are it isn't coming back.
17. There is no sure thing in the market—I was bound to be wrong half of the time. I must accept this fact and readjust myself accordingly—my pride and ego would have to be subdued."
The best are just really really good at losing.
Only after losing can you learn to win.
The best are just really really good at losing.
Only after losing can you learn to win.
18. “For the first time in my stock-market career I refused to take a quick profit.”
Rules and prior mistakes led Darvas to overcome one of his main fallbacks as a trader.
Take a hard look at your trading & commit to fixing the mistakes you make on a daily basis.
Rules and prior mistakes led Darvas to overcome one of his main fallbacks as a trader.
Take a hard look at your trading & commit to fixing the mistakes you make on a daily basis.
19. "I should rather hold on to one rising stock for a longer period than juggle with a dozen stocks for a short period at a time."
Concentration (your focus and portfolio equity) on the right things is a simple way to outperform in the long run.
Concentration (your focus and portfolio equity) on the right things is a simple way to outperform in the long run.
20. "Having made these decisions, I then sat back and re-defined my objectives in the stock market:
1. Right stocks
2. Right timing
3. Small losses
4. Big profits
I examined my weapons:
1. Price and volume
2. Box theory
3. Automatic buy-order
4. Stop-loss sell-order"
1. Right stocks
2. Right timing
3. Small losses
4. Big profits
I examined my weapons:
1. Price and volume
2. Box theory
3. Automatic buy-order
4. Stop-loss sell-order"
I hope you've found this thread helpful.
Follow me @GregDuncan_ for more content on the stock market.
Like/Retweet the first tweet below to share Darvas' realizations with another trader:
Follow me @GregDuncan_ for more content on the stock market.
Like/Retweet the first tweet below to share Darvas' realizations with another trader:
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