According to his book, Nicolas Darvas fell into investing after being unable to fulfill a booking at a nightclub.
This was in the 1950s and at this point Darvas was a famous dancer. A strange offer of payment (you'll see what I mean in the book) resulted in him making money from some shares he bought and so he started buying and selling stocks on a regular basis.
He ended up riding a handful of stocks to great heights during a bull market.
This book covers his journey from lucky beginner to wealthy investor and includes all the typical errors and assumptions made by new wannabe traders. Darvas makes all the mistakes and more.
Though the book is quite short it's definitely entertaining. I tend to read it every couple of years to remind myself of all the lessons it contains.
Darvas was smart in that he cut his losing positions quickly and he was very good at letting his winners run and run. Not at first, of course, but over time he learned this lesson.
He also liked to add to winning positions.
Every trade began with a small "test" purchase after he identified a stock using his Box Theory. The large profits came because he wasn't afraid to lump on lots more money to a rising stock later on, after his initial purchase came good.
What you'll find when you read this book is that Darvas overtraded. He used up large portions of his total bank on single trades and even bought shares on margin so he could buy as much as possible of a single share.
But he was also very successful because he was distant from the markets. Darvas travelled extensively as he was performing across the world. This meant that the information he received about the market and his positions was hours or even days old. We've got everything at our fingertips with smart phones and 4G but he managed to do all his best investing using only telegraphs sent to hotels or airports.
He ignored the news and watched the price movements of shares. Consequently he managed to buy some of the biggest moving shares at the time and pyramid up his positions to make some superb returns.
There are some who don't believe his story and on reading the book it is a little light on detail and fishy in places. On the other hand it is full of some very important lessons and takeaways and for that reason I would recommend it for anyone who is interested in developing their own trading system.
In fact, this would probably be the book I would recommend should any of my friends or family ever ask for advice on investing.
It's not that they would find a profitable trading strategy from the pages within this book, nor would they discover any radical knowledge that has been lost over the years.
No, with any luck reading this book would steer them away from the usual mistakes traders make before they get the opportunity to make them.
One bit of advice I could offer - try and buy the edition of this book with the yellow cover. I've previously bought a different version and found it was poorly formatted and missing large chunks of text. The yellow book (pictured) is one I have bought twice and found it to be complete.
Pick up the book for a few pounds on Amazon or eBay:
Click here to search on eBay
Click here to find book on Amazon