There is a lot that you can learn from an accomplished trader like Nicolas Darvas. It may be wise to be a little suspicious of trading experts and their stories. Darvas’ tale however is one worth seriously considering. After all, this is the man who made $2 million out of just $25 thousand. What is even more amazing about this accomplishment is that he wasn’t even a pure trader. He was a travelling ballroom dancer.
How did he do it? The real story is a long one. It is, however, possible to arrive at the same level of success by looking into three vital trading lessons.
#1- Trading requires a plan.
There was a point in the trading career of Nicolas Darvas in which he followed the temptation to go for what seemed good. In other words, he entered trades based on the latest hot trends or those that other traders seemed to go crazy over. This led to huge losses.
Darvas later learned that trading should not be ruled by emotional decisions. Decisions should instead be ruled by a logical trading system or plan. A system will give you some measure of control over the very few aspects that you can manage in trading. Although you cannot tell the market where to move and up to what point, you can indicate when and where you will enter or leave a trade. You can also indicate yourexact money management rules.
#2- Research is always better than plain advice.
The Darvas trading system was born after significant losses caused by following too many pieces of advice. Although there are some experts worth listening to, always keep in mind that some opinions or tips may be biased or unsupported by facts. If you listen to a lot of third party inputs, you will also realize that many of them conflict with each other.
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- Don’t be afraid to claim ignorance.
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.
Just like Darvas, you can become a professional trader too if you learn from your experiences. If you want to reduce the losses you would have to bear though, it would be a good idea to start learning from what others like Nicolas Darvas have gone through. Make his story your foundation for creating your own logical trading system.
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