Marcus's collected quotes

marcus · #61 12th January 2008, 01:11 AM

Many traders, well almost everyone knows and is fascinated by Nicolas Darvas the theatrical dancer who parlayed $3500 to $2000000. What most people don't know is that he trained very hard to achieve that, reading eight hours or more a day almost to the point of exhaustion ..... he glutted 200 books ...... well truisms of past traders did help ... at least for him .....

Quote:

The lights go low at Manhattan's garish Latin Quarter nightclub. Onto the stage glides a slim-hipped, broad-shouldered man in white tie and tails. He grasps his partner, a stunning redhead in black tights, whirls her over his head on one arm, hurls her dramatically in a split-legged fall to the floor. The dance team is Nicholas Darvas and his half-sister, Julia, one of the top acts in the U.S. What the tired businessmen watching the show do not realize is that Hungarian-born Nicholas Darvas, 39, is a better money man than most of them; he is a top stock-market speculator who has parlayed his considerable weekly income ($3,500 currently) into a fortune of more than $2,000,000.

Moneyman Darvas' methods would raise the eyebrows of most Wall Streeters. Instead of studying what Wall Street calls the fundamentalsâ€”price-earning ratios and dividendsâ€”he judges public enthusiasm, a method that works best in volatile markets. "In my dancing I know how to judge an audience," he says. "It is instinctive. The same way with the stock market. You have to find out what the public wants and go along with it. You can't fight the tape, or the public."

Darvas' system is tailored to his job. Since he has to do trading from wherever he is dancing (he recently completed an Asian tour) he ignores tips, financial stories and brokers' letters, has never been in a broker's office. Basically, his approach is that of a chartist: he watches price and volume. But the only charts he keeps are in his head. He studies the weekly stock tables in Barron's, receives a nightly wire from his broker giving the high, low and closing of stocks he is following, as well as the Dow-Jones averages. When a stock makes a good advance on strong volume, he begins watching it, buys when he feels that informed buyers are getting in. For example, when he was playing in Calcutta, he noticed E. L. Bruce moving up in the stock tables. Suddenly, on 35,000 shares it moved from 16 to 50. He bought in at 51, though he knew nothing about the company, and "I didn't care what they made." (They make hardwood flooring.) He sold out at 171 six weeks later.

Darvas places his buy orders for levels that he considers breakout points on the upside. At the same time, he places a stop-loss sell order just below his buy order, so that if the stock does not move straight up after he buys, he will be sold out and his loss cut. "I have no ego in the stock market," he says. "If I make a mistake I admit it immediately and get out fast." Darvas thinks his system is the height of conservatism. Says he: "If you could play roulette with the assurance that whenever you bet $100 you could get out for $98 if you lost your bet, wouldn't you call that good odds?" If he has a big profit in a stock, he puts the stop-loss order just below the level at which a sliding stock should meet support. He bought Universal Controls at 18, sold it at 83 on the way down after it had hit 102. "I never bought a stock at the low or sold one at the high in my life," says Darvas. "I am satisfied to be along for most of the ride."

Limiting his selections to five or six stocks at a time, Darvas often studies one for weeks or months before buying. He steers away from blue chips, buys only growing companies. "I am only in infant industries where earnings could double or treble," he says. "The biggest factor in stock prices is the lure of future earnings. The dream of the future is what excites people, not the reality."

Darvas studied economics at the University of Budapest, fled Hungary for Turkey in World War II (he still holds Turkish citizenship), methodically trained eight hours a day to become a dancer. He came to the U.S. in 1951, got interested in the market in 1952 when a Toronto nightclub owner paid him off in a mining stock that promptly trebled. (He sold it at that point; it later collapsed.) Darvas trained for the market just as methodically as he had studied his dancing, read some 200 books on the market and the great speculators, spent eight hours a day until saturated. Two of the books he rereads almost every week: Humphrey Neill's Tape Reading and Market Tactics and G. M. Loeb's The Battle for Investment Survival. He still spends about two hours a day on his stock tables. Even though he has made a fortune he plans to keep on dancing. Dancing is his business; the stock market is just that second income.

His book "How I made $2000 dollars in the stock market" has got one of the highest number of reviews on amazon right up there with Schwagers market wizard books and Reminescences ..... its also a favorite of many of the great traders of our time.

Reference : http://en.wikipedia.org/wiki/Nicolas_darvas

kkseal · #62 12th January 2008, 02:40 PM

Quote:

Originally Posted by marcus

Totally agree oilman, sadly I read it two months ago, I wish someone had told me about this book earlier ... anyway better late than never.

Which book are you guys referring to?

Regards,
Kalyan.

oilman5 · #63 12th January 2008, 10:04 PM

phantom of pit

krishna23 · #64 13th January 2008, 12:28 AM

really great thread..it never hurts to learn from the pros!

newbee · #65 13th January 2008, 07:59 AM

Quote:

Originally Posted by kkseal

Which book are you guys referring to?

Regards,
Kalyan.

Quote:

Originally Posted by oilman5

phantom of pit

Hello Kalyan

Many versions of the book are available online, here's one Link for the pdf. PhantomOfThePits, Another one Phantom's Gift

Hello Marcus, oilman

Do check out this thread on ET for something similar for ID traders AHG - Profitable Strategy for Struggling Traders

To download notes based on posts to the thread

You will need to login to ET to download the word file containing notes.

Thanks
nb
___________________________________
TRADE WHAT YOU SEE, NOT WHAT YOU THINK

kkseal · #66 13th January 2008, 02:51 PM

Thanks Oilman & Newbee I am practicing speed-reading nowadays, aiming for 500wds/min, so no content is useless (whether i like it or not)

Regards,
Kalyan.

marcus · #67 13th January 2008, 07:25 PM

Its never been published as far as I know, thats why it doesn't appear on most lists, its just a dialogue between this trader called Art Simpson and another anon trader who calls himself Phantom of the pits. I had already given the link for the book in my post no# 58

Thanks for the ET link newbee I will definitely go through all 1000 pages in time.

newbee · #68 13th January 2008, 08:04 PM

Quote:

Originally Posted by marcus

Its never been published as far as I know, thats why it doesn't appear on most lists, its just a dialogue between this trader called Art Simpson and another anon trader who calls himself Phantom of the pits. I had already given the link for the book in my post no# 58

Thanks for the ET link newbee I will definitely go through all 1000 pages in time.

Hello Marcus

You can go through the summary document compiled from the thread, along with about 40 MB of charts posted.

There is also a channel on mirc that has about 100 odd traders using /learning this method, where the OP himself guides and mentors the learners. you can find it here

The server is IRC://othernet.org:6667, the room is named AHG

Thanks
nb
___________________________________
TRADE WHAT YOU SEE, NOT WHAT YOU THINK

marcus · #69 14th January 2008, 04:28 AM

thanks again Newbee will defi visit the othernet channel some time

marcus · #70 12th February 2008, 04:34 AM

Well I may not be a follower of William Delbert Ganns methodology, but I believe if someone survived 40 years on wall street and prevailed he must know what he's talking about. So listen to what he has to say and decided for ourselves what makes sense to us and what doesn't it. I believe we can learn something good from all great traders...

First a foreword about Gann

Quote:

William Delbert Gann made an enormous contribution to analysis and trading throughout his long lifetime. The fact that his techniques are used by so many traders and investors today, almost 50 years after his death, is evidence enough of his enormous contribution. Even his few critics flatter him by repeating his never failing rules as their own, more than half a century after Mr. Gann first devised them.

W. D. Gann's last book, 45 Years in Wall Street, written when he was 72 years of age, was arguably his best stock market book. It was written with the immense benefit of his lifetime of experience in Wall Street. It was inspired by a desire to pass on his wisdom to others.

Gann's foreword from the book:

Quote:

I am now in my 72nd year; fame would do me no good. I have more income than I can spend for my needs, therefore, my only object in writing this new book is to give others the most valuable gift possible KNOWLEDGE! If a few find their way to make safer investments my object will have been accomplished and satisfied readers will be my reward.

Next the most imp reasons Gann attributed to people losing money in the markets:

Quote:

They overtrade or buy and sell too much for their capital.

They do not place stop loss orders or limit their losses.

Lack of Knowledge. This is the most important reason of al

In order to make a success trading in the stock market the trader must have definite rules and follow them. The rules given below are based upon my personal experience and anyone who follows them will make a success.

Gann then went on to list his 24 cardinal rules which he formulated in 40 years on wall street having seen it all, Gann's own words are in italics

Trading can be exciting. Money management is intrinsically boring. As a consequence, many traders ignore basic money management rules to their peril. It is no coincidence that Mr. Gann's first rules are survival rules. As Mr. Gann stated:

Quote:

Rule 1 Amount of capital to use: Divide your capital into equal parts and never risk more than one-tenth of your capital on any one trade

Your first thought must be to protect your capital and make your trading as safe as possible. There is one safe, sure rule, and the man who will follow it and never deviate from it will always keep his money and come out ahead at the end of every year. This rule is divide your capital into 10 equal parts and never risk more than one-tenth or 10 per cent of your capital on any one trade. You can always find new opportunities to make profits, so long as you have capital to operate with. Taking heavy risks in the beginning endangers your capital and impairs your judgment. Trade in such a way that you not be disturbed mentally by a loss or two, if it comes.

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