1920–1977 · Stocks · Dancer turned investor
Nicolas Darvas: The Box Method and His Rules
A professional dancer who traded by telegram: buy strength out of boxes, protect every position with a stop.
Who they were
Nicolas Darvas was a Hungarian-born dancer who performed around the world with his partner. In the 1950s, starting with a few thousand dollars, he traded stocks by cable and telegram while on tour, receiving only price quotes.
After many losses following tips and rumours, he developed his own method based purely on price and volume. He described turning his stake into about two million dollars in "How I Made $2,000,000 in the Stock Market" (1960).
Principles and rules
1. Boxes
Strong stocks move up in a series of boxes: a rise, a pause in a range, another rise. The pause defines the box top and bottom.
2. Buy new highs
He only bought stocks breaking out to new highs, never ones that looked cheap.
3. Automatic stops
Every buy order came with a stop just below the box. He described stops as the protection that let him trade without fear.
4. Trail the stop
As new, higher boxes formed, the stop moved up under each one. He never sold at a target.
5. Techno-fundamental
Later he added a fundamental filter: rising earnings in growing industries.
Key lessons
- Noise and tips are expensive; price and volume are enough.
- A stop on every trade is not optional.
- Strong markets tend to stay strong.
Strategies from this method
How to practise it
The Darvas box strategy page has the rules. In Candlemind draw the box with the rectangle tool after a strong move and use a pending buy stop above it.
Frequently asked questions
Did Nicolas Darvas really make $2 million?
That is his own account, published in his 1960 book. Some details have been debated, but his method has been studied by traders for decades.
What is the Darvas box theory?
The idea that strong stocks rise in a series of consolidation boxes; you buy the break of a box top and keep a stop below the box bottom.
Summaries and paraphrases of public books and interviews, for education. Not investment advice.