Nicolas Darvas: The Man Who Took on Wall Street and Won

by Darrin Donnelly on March 8, 2012

What is it about Nicolas Darvas’ story that has made it so endearing over the last 50-plus years?

His first book, How I Made $2,000,000 in the Stock Market, is considered a Wall Street classic and his subsequent books remain brisk sellers decades after they were written.  Why do these books continue to captivate traders of all skill levels so many years later?

Obviously, there is an inspirational factor to it.  When someone overcomes incredible odds and does the seemingly impossible – in this case, turning just over $30,000 into $2.25 million in less than two years – it certainly excites and motivates us all.  It reminds us of the enormous potential the stock market holds if the stars align just right.

But the stock market has a long history of such “rags-to-riches” stories.   These tales inspire us, for sure, but they don’t continue to captivate us decades later the way Darvas’ story has.

So what is it?  What makes Nicolas Darvas go beyond the mere subject of an inspirational true story to a Wall Street legend whose teachings continue to educate and fascinate us several decades later?  What makes Darvas and his writings so timeless? [click to continue…]

Why Woody Hayes Would’ve Been a Great Trader

by Darrin Donnelly on March 1, 2012

“To hell with exciting.  I’d rather be drab as hell and win.” – Woody Hayes

Traders need to adopt the Woody Hayes philosophy.

Football is a lot like trading.

In football, the fastest and most exciting way to try to score points is by throwing deep passes regardless of where you are on the field.  On any given down, a big pass play that goes for six is always a possibility.

Exciting?  Yes.

Practical?  No.

Throwing deep on every play may result in a touchdown here and there, but the odds are much higher that going “all or nothing” on each play will lead to a lot more turnovers than touchdowns.

Instead of trying to score a touchdown on every play, smart plays are designed to first pick up positive yardage.  Enough positive yards and you start picking up first downs, no matter how exciting the manner in which those yards are gained.  Keep racking up first downs and you’re eventually in position to score a manageable touchdown. [click to continue…]

The Worst Time to Quit

by Darrin Donnelly on February 27, 2012

Most people make the decision to quit something right at the time when it’s most difficult to stick with it.

Yet, in another one of those ironic laws of living a successful life, the period when it’s most difficult to continue with something is typically the very WORST time to quit at it.

Right in the middle of a difficult period is when we make our most irrational decisions.  Our emotions take over and we fail to see the big picture.  The decisions we hastily make during these periods are the decisions we regret the most later on in life.

This is true in all areas of life, but traders can relate to this fact especially well. [click to continue…]

Why the Best Time to Buy a Stock Is When It Hits New Highs

by Darrin Donnelly on February 23, 2012

Trading stocks is a lot like betting on a horse race: you want to bet on the leaders.

When it comes to buying stocks, there are basically two major philosophies on the best time to do so.

In the first camp, we have the much more popular and traditional belief that the best time to buy a stock is when it’s priced very low – well below its previous highs, in fact.

This is an easy-to-understand philosophy.  If a stock had been trading at $100 and it’s now trading at $30, it must be a great bargain, right?  We apply the same strategy to the way we buy most things in life.  If a pair of jeans we want had previously been priced at $100 and now, during a big sale, they’re priced at $30, we buy them as fast as we can.

Value investing, value shopping; it’s based on the same basic premise. [click to continue…]

The Common Trading Mistake Nobody Wants to Talk About

by Darrin Donnelly on February 21, 2012

Traders often suffer from "Grass Is Always Greener Syndrome."

Jack Schwager interviewed dozens of the world’s most successful traders for his famous Market Wizards series of books.  In The New Market Wizards, Schwager summed up THE critical element that separates good traders from bad traders:

“When asked to explain what was important to success, the market wizards never talked about indicators or techniques, but rather such things as discipline, emotional control, patience, and mental attitude toward losing.  The message is clear: the key to winning in the markets is internal, not external.”

Few successful traders would argue with Schwager’s point. [click to continue…]

Why Do You Want to Be a Trader?

by Darrin Donnelly on December 1, 2011

Just about everyone who enters the world of trading, even on a very limited basis, dreams of one day becoming a full-time, professional trader.

Trading for a living is certainly a worthy goal held by many talented and hard-working people.  But whenever this subject comes up, I like to ask hopeful traders exactly WHY they want this to be their profession.

There are two very common answers to this question. [click to continue…]