« Information on Automotive Money Credits | Home | In The Event You Become A Member Of A Web Based Options Trading Forum? »
What Trader Nicolas Darvas Teaches Us
By John | May 8, 2010
If you haven’t made your fortune in trading yet, you might want to have a peek at the story of Nicolas Darvas. It is reasonable to be wary of success stories but his story is real and one from which you can draw a number of good insights. One concrete reason you should pay attention to this man is because he was able to make a fortune out of just $25,000 and he wasn’t even a full time trader when he started out.
What exactly did Darvas do to make a fortune? He simply applied the lessons he picked up from his experiences. Here are his top learning points that you too can benefit from.
#1- A trading system is an absolute requirement.
Nicolas Darvas didn’t always trade successfully. There was a time when he encountered failures too and some of those times were when he went along with what felt good. He made trading decisions based on what others thought were hot items or based on what he felt was a good move.
Darvas later learned that trading should not be ruled by emotional decisions. Decisions should instead be ruled by a logical trading system or plan. A system will give you some measure of control over the very few aspects that you can manage in trading. Although you cannot tell the market where to move and up to what point, you can indicate when and where you will enter or leave a trade. You can also indicate your exact money management rules.
#2- Don’t follow advice at the expense of solid research.
The Darvas trading system came about only after Darvas lost money over other people’s pieces of advice. Of course, it does make sense to learn from what other traders have gone through. It is a different story though when you are presented with opinions that do not have factual supports. Without proper research, trading inputs from others may be too biased or thoroughly unreliable.
If you can’t tell exactly which expert is the real deal, the best course to take is to research on your own. When you make decisions regarding your trading plan, you need to make them based on technical findings and analysis. If there are some pieces of advice that do seem to make sense, check first if they are tested points.
#3- Don’t be afraid to claim ignorance.
The Darvas trading method became a reality because Darvas finally admitted his ignorance and started to ask questions. Just like Darvas, a trader’s natural inclination is to appear to be an authority and to pretend to be knowledgeable. This however can only lead to disaster. It is so much better to accept your limitations so you can go right ahead and look for the answers to the questions that matter.
You may eventually become a good trader as a result of your own experiences. Often though, you can reduce the number of failures you’d have to get up from if you learn from the experiences of people like Nicolas Darvas. Although you shouldn’t follow his path straight out of the box, what he has gone through and achieved can help you devise your own methods and plans.
Topics: Stocks |
Comments are closed.
