subject: Top Three Lessons From Trader Nicolas Darvas [print this page] There is so much to gain from reading the history and methods of experts like Nicolas Darvas. For people who are wary about following trading gurus and experts, there is one good reason to look into this man's techniques. Unlike other so called experts, this one, made $2 million out of just an initial $25 thousand investment. He did this while touring the world as a ballroom dancer.
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.
Early in his trading career, Nicolas Darvas had moments when he simply traded based on what appeared to be attractive options. He made his choices based on what other traders were running after and based on his personal inclinations. This was the reason why he lost a lot of cash.
Darvas made the mistake of emotional trading. If you don't want to lose money by following your emotions, you should have a trading system in place. This is what expert traders use to control the very few factors that can be controlled in trades. Although you cannot dictate how the market will move, you can still manage your entry points, exit points and risk levels. When you decide to follow a system, you will only lose at a level that you can live with.
#2- Don't sacrifice research over opinion or advice.
The Darvas trading system became a reality only after Darvas lost a fair amount of cash as a result of following opinions. The truth is that, it can help you a lot to listen to what real experts say and know. What can be damaging is taking the advice of people who have no data to back their tips or who make opinions based solely on personal biases.
The best way to avoid being caught in the trap of expert opinion is to perform your own research. Make your system or your trading decisions based on strong technical data and thorough research. If you have to listen to an expert, make sure you get advice that is tested or backed with research findings.
#3- Admit ignorance and ask questions.
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.
by: Reece Mathews
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