How I made $2,000,000..

[-oo0(GoldTrader)]

Hi GoldTrader,
I found information on the usenet that you may have read the book by Nicolas Darvas "How I made $2,000,000 in the stock market". Please tell me about your experience: do you actually make money with the Darvas box breakout strategy?

I did some research on the Web, and most traders say that Darvas'es trading methods can still be used in today's market. Let me know how this book has worked for you.

Pavel,
This is an example of how we are using Darvas box today trading Seasonal Spreads. The below chart is a Meal spread. From November thru the end of February the difference between the contracts bounced between –6 and –10. This was the box. Whenever prices got near –10 buying pressure provides support. Whenever they got near –6. Selling pressure prevented prices from escaping the box.

At this time of year we are already in a Meal spread, expecting to add a different combination of contracts the first week in March. A few days after this spread broke out. Spread traders do not have the advantage of using volume as Darvas does with stocks. But none the less. This is a box, and this is an example of a box break out near a seasonal window.

For four months (November thru February), traders shorted the top of the box and bought the bottom. Once short, they would have put orders to buy back there shorts when prices broke above the top just in case. When prices did break out, all of these traders covered there shorts by buying them back. Many also went long. All of this happened at about the same time, causing prices to spurt out of the box.

If the margin on this spread was about $400, and it paid $100.00 a point. Then catching ten points would have returned about 250% on margin.

 

[fastnet]

Hi GT - interesting chart - I'm not sure why but i had never imagined spread traders buying support and selling resistance in the same way that outright stock/future traders would. My impression of spread trading so far is that you know when a seasonal rally should begin (approx) and you then use pretty basic TA to time your entry. Ths shows a new dimension but on which i would ignore until I am much more experienced at placing orders and the vagaries of spread action.

Also noticed that even this breakout obeyed the valuable law of ''second time through''. I learnt this lesson by trial and error but have subsequently seen it in books. First break out of a 'box' or channel is usually a false dawn. It's the second break of the high of the initial break (that subsequently proved false) that usually proves successful. On your chart I would have bought on 25th rather than the 18th. Okay sometimes the first break is the main event and you must let it go but, more often than not, it pays to wait.

I'm you use this already - I mentioned it more for others interested in trading BOs from ranges/channels etc

Cheers, FN

 

[Baruch]

Still using the spread system?

http://www.nicolasdarvas.org/index.php

 

[drewfus31]

"Spread Shuffle"
I like it!

 

[subhaikav]

Really a great information and useful links.

 

[spreadbettingportal]

Stock market is one thing, the spread betting is another ! dont forget it

 

[-oo0(GoldTrader)]

Spread Trading

Yes and I am afraid that commodities futures markets are yet another thing.

Stock market is one thing, the spread betting is another!

And of course Spread trading futures is another.

Quote from -ooO-(GoldTrader)-Ooo-:

Leo Melamed on the origins of futures says "It is no simple task to pinpoint with any degree of exactitude the precise moment when the idea of futures and options was born."

"Indeed, the idea of establishing forward availability of product as well as its future price was conceived at the dawn of mankind, perhaps at that inspirational moment just after Eve bit into the proverbial apple and then frantically sought to make a futures contract with Adam."

"Clearly, the first recorded application of futures is Biblical, when Joseph outlined to the Pharaoh his plan for forward buy hedges in grain to protect the land of Egypt from the coming seven years of famine."

"Ancient records are replete with proof that markets, utilizing elements of modern futures exchanges, were in existence throughout man's early history and in every corner of civilization. Sumerian documents, circa 3,000 B.C., reveal a systematic use of credit based on loans of grain by volume, and loans of metal by weight. Ancient records found in China, Egypt, Austria, and India are replete with rules and regulations pertaining to active commodity markets. In the city-states of Greece, market laws were in place to prevent manipulation. During the Roman period, there were nineteen trading markets in Rome called Fora Venalia that specialized in distribution of specific commodities, many of them brought from far corners of the earth by caravans. There were a host of medieval European seasonal festivals, the actual precursors to our modern exchanges, which evolved into important year-round markets, incorporating such features as self-regulation, business conduct, guarantee of contract fulfillment and mutual trust among merchants."

"In the sixteenth century, in two opposite parts of the world, two similar techniques were created to deal with inherent risks of production and delivery: In London, the great commercial insurance syndicate of Edward Lloyd was born; In Osaka, Japan, the first rice futures exchange was founded. Later, as a result of increased international trade spurred by the industrial revolution, a system of to arrive forward purchasing became commonplace throughout the then commercial world."

"Excerpted from a speech, by Leo Melamed."

More: The History of Futures Trading - An Overview

 

[trader_dante]

Good thread. Darvas was a legend. "How I Made..." is one of my favourite trading books of all time. Lost count of how many times I've gone through it. And his theory still works incredibly well.

 

[Atilla]

Darvas is still valid.

Here is the link deleted

DO NOT VISIT THIS LINK

IT IS AN ATTACK SITE...



Reported Attack Site!


This web site at stockvision has been reported as an attack site and has been blocked based on your security preferences.










Attack sites try to install programs that steal private information, use your computer to attack others, or damage your system.

Some attack sites intentionally distribute harmful software, but many are compromised without the knowledge or permission of their owners.

 

[trader_dante]

I've done my a*se.

Badly.

 

[-oo0(GoldTrader)]

Darvas ebook

Darvas did not invent the box-break out. A breakout was used in a game known as Catura[FONT=&quot]ṅga in the 6th century.

Catura[FONT=&quot]ṅ[/FONT]ga, meant four parts; and these were the foot soldiers, the cavalry, the elephant brigade, and the chariots. Represented by pawn, knight, bishop, and rook. You may have heard of it? The game is now called Chess.

Darvas does however explain this “box-break out technique,” in a very simple way for use in modern trading markets.

Who moved my cheese?

Probably some software on your own machine, trying to scare you into buying a subscription. The only thing that attacked me was an Amazonian blond chick, on the beach needing a little TLC. As far as searching the web on my Mac, no invasions ever!

A break out in the direction of the expected seasonal trend at the expected time, is the basis of our entries on all winning seasonal spreads?

1. Stochastics anticipates breakouts.
2. Parabolic keeps you in.
3. Seasonal charts show price targets.

Anyone can email me and I will send you a copy of Darvas, or even Livermore, if you want. I found it on Wikipedia, the free encyclopedia. Traders can also read Darvas, Nicolas - How I Made $2,000,000 in the Stock Market online anytime.

The important thing is that you learn the value of how “volume confirms, price.” So, that when you return later trading spreads, you will have the confidence to take and stick with longer-term positions. .[/FONT]

 

[jansher21]

The trend is your friend, but when I see the word "system" - I just cringe and switch off very quickly. You have to learn the craft and when people sell systems, I am very skeptical.

 

[-oo0(GoldTrader)]

System

[FONT=&quot]Darvas did sell a book explaining how a box-break out works, when he was alive. The first copy I read was in the public library.

The trend is your friend, but when I see the word "system" - I just cringe and switch off..

No-body is trying to sell you anything that might help make you financially independent. This thread is offering you a copy of his book, and its knowledge for free. The origin of the word system comes from “set-up.” Don’t you want to be able to recognize when the market is "setting up," for a relatively bigger move?

Suppose that you were going to school to be come a Doctor. Would you complain about the cost of medicinal books?

If you are successful trading spreads you can make a lot more than any Doctor. Unless the Doctor holds seasonals also.[/FONT]

 

[jansher21]

Nothing wrong with books for free ofcourse, I just think that working with traders or teams that have a track record and perhaps following their trades is better for traders especially when they are starting out.

There are endless lines of commentators on TV who will give you every pattern in every book - the question is ... have they made any money trading ??

This is where the proof is, if someone says "here are my signals, here is what I made last 5 years" ... that is worth more than any book or pattern.

It's the way I learned and got to where I am. Not wanting to force it on anyone else.

[FONT=&quot]Darvas did sell a book explaining how a box-break out works, when he was alive. The first copy I read was in the public library. No-body is trying to sell you anything that might help make you financially independent. This thread is offering you a copy of his book, and its knowledge for free. The origin of the word system comes from “set-up.” Don’t you want to be able to recognize when the market is "setting up," for a relatively bigger move?

Suppose that you were going to school to be come a Doctor. Would you complain about the cost of medicinal books?

If you are successful trading spreads you can make a lot more than any Doctor. Unless the Doctor holds seasonals also.[/FONT]

 

[london_lad]

What is this spread trading? It doesnt look like spreadbetting. Are you trading credit curves/ CDSs?

 

[-oo0(GoldTrader)]

Spreads vs: Betting

When we trade futures, we are assuming risk that someone must hold each day in order for the system to work and everyone can be feed. In essence commodity traders provide price insurance to the worlds food, energy, and financial markets.

What is this spread trading?

When we simultaneously buy and sell futures on some commodity, the profits we attempt to pocket are from the premiums the market pays for our added liquidity. This is an economic function that has been going on since earliest times.

Seems to me your odds blindfolded, are 50/50 minus fees and taxes. Much less buying at harvest, when the lowest prices are historically reached, and selling six months later, during a drought, a flood, or both.

It doesn’t look like spreadbetting.

Speculation in commodities futures is taking overnight risks that someone has to take. Someone has to own the world’s crop of grain etc. Unlike when hedging in the commodity markets, you may not actually own anything real in spreadbetting.

Speedbetting simply allows you to speculate on the price movement of securities. When you bet on something where no-risk needs to be accepted as in betting on the flip of a coin, this is pure gambling.

Spreadbetting is a highly risky form of gambling. Only 20 per cent ever win spreadbetting according to the The Times April 10, 2009... a report from Cass Business School found that only 1 in 5 .. ends up a winner.

Are you trading credit curves/ CDSs?

One of the things we spread Eurodollars, reflect short-term interest rates on global deposits of US dollars. In a recent market letter spread guru Jerry Toepke said,

With quarterly contract months listed 10 years out, the market can hedge and speculate on rates far into the future. One way of trading changes in said rates is via spreads. For example, if the price of March 2010 futures is 98.00 and that for March 2011 futures is 96.50, the market is building in the probability of a rise of 1.5% in rates over that year's time. Those spreads expand and contract and can go from a premium to a discount depending on market expectations.

So I guess you can say we can trade credit curves using spreads. "Those spreads expand and contract." Trading seasonal patterns minimizes risk. You can see on the below chart that last summer Euro$ bottomed and toped out early. Chances were much greater than 50/50 for a win. Return on margins was awesome!