Proof That The Nicholas Darvas Box Theory Works

The Nicholas Darvas Box Stock Market Success Story (part 23)

I came to see that when a stock was on a definite upward trend there was a feeling of proportion about its advance. I could represent this in the nicholas darvas box. If it was on its way, rising from, let us say, 50 to 70 but occasionally dropping back, which was all part of the right rhythm.

It might have gone like this:

50 - 52 - 57 - 58 - 60 - 55 - 52 - 56

That meant it was in the 52/60 nicholas darvas box.

After this, on an upward swing, it might have gone:

58 - 61 - 66 - 70 - 66 - 63 - 66

This meant it was well inside the 63/70 nicholas darvas box. I also considered that it was still edging towards higher spheres.

The major problem still remained; what was the right time to buy into it? Logically, it was the moment when it entered a new, higher nicholas darvas box. This seemed quite simple, until the case of LOUISIANA LAND & EXPLORATION proved it was not.

For weeks I watched the behavior of this stock and saw it form its pyramiding nicholas darvas boxes. When the upper frame of its last nicholas darvas box was 59 & three quarters, I felt I had assessed it correctly. I told the broker to telephone me when it reached 61, which I considered the door of its new nicholas darvas box. He did, but I was not in my hotel room when the call came. It took him two hours to reach me. By the time he did, the stock was quoted at 63. I was disappointed. I felt I had been deprived of a great opportunity.

I was angry at the way it had passed me at 61 and when it went to 63 in such a short time I was certain I had missed a very good thing by not acting on this nicholas darvas box. Good reason deserted me in my excitement. I would have paid any price for this stock in my enthusiasm. I just had to get into a stock that I thought was going up to a fabulous price.

Up it went - 63 & a half - 64 & a half - 65. I was right. I had judged it correctly and I had missed it! I could not wait any longer. I bought 100 shares at 65 - at the top of its new nicholas darvas box - because I had missed it at the bottom.

Although I was improving in my selection and method, I was still somewhat of a baby in the mechanics of Wall Street, so I placed my problem before the broker. We discussed the 61-point telephone call that had unfortunately missed me. He told me I should have put in an automatic "on stop" buy order. This meant the stock would have been bought when it rose to 61. He suggested that whenever I made a decision about a stock I should put in a buy order at a named figure. Then the stock would be bought for me without further consultation if the market reached this figure. This I agreed to do. 


IMPORTANT: Would you like to download Darvas’ story in PDF & MP3 format?
Click Here To Download It Now

Copyright © 2008 -