Has the stock market trading always fascinated you? Would you like to know how to earn money through the stock market? Read on then!
An Unconventional Stock Trader
Retail traders all over the world have always tried to make money in the stock markets but failed miserably. There are a lot of reasons for this.
One of the reasons is the inability to read charts properly. This is the basis of all stock trading, doesn’t matter if you are trading in the future, options, commodities, or equities. Learning how to read charts is a crucial and essential skill a trader must have.
Another reason is not knowing the direction in which the market will go. This is one of the biggest reasons why retail traders lose money. When they buy, the market falls down, when they sell, it goes up. It feels as though someone is sitting behind your back and swinging the market in exactly the opposite direction in which you take a trade.
There are also many other reasons, but the main being the movement of the institutions or big players. They hold positions in huge amounts which lead to movements in the market. So, how can you know when the market will be going up or down.
Enter Nicolas Darvas. Nicolas Darvas, by profession, was a dancer. In the book, he explains his whole journey on how he got introduced to the stock market.
At first, he made money by sheer luck when he was given a couple of shares and kept on holding it and eventually made a profit from it. The rest of the book is dedicated to the trading system he developed for himself.
You have to understand these events take place in the past century. In a time when mobile phones were not present, the internet didn’t exist. If you wanted to gather data, there was a chunk of paperwork you had to go through. One more important aspect is that Nicolas traded while he was traveling the world where he used to dance where the customer called.
The first method we are introduced is the box theory. It basically states that all stocks move in a bracket of highs and lows. When one breaks this boundary, they tend to move in that particular direction from another box of high and low. He combined this with the volume of the stocks that are being traded. If he saw a sudden spike, he would know something had happened in the market and would buy if the signals were there.
I have just summarized one of the methods there are various other methods he employed, if you want to know them completely, I suggest you read his book.
How He Earned 2 Million In Stock Market Trading
There is an important aspect in trading which is highlighted, which is control over your emotions and discipline, which is not talked about much.
He explains a very common phenomenon in which, traders will hold when they are losing money and get out quickly when are in profit, out of fear and they will lose their gained money.
Another important aspect is cutting out the noise of the market and making decisions yourself. As you read through his journey, you will see how his trading had a detrimental impact when he abandoned his system and started taking tips from others without thought and logic.
In this book, he also explains how to cut out your losses and ride your profit without emotions affecting you, which is one of the crucial skills that helped him gain his wealth.
In summary, it is a great book for beginner traders who want to start trading learn the ropes of the market, and, also lessons on how to learn to adapt your strategies so you come out on top most of the time, no strategy is flawless, but if one gives you consistent profit most of the time, it is a good strategy.