An Interview with a Modern Day Nicolas Darvas
Don’t Miss to Watch 3 VIDEO’s
Who is Dan Zanger?
Dan Zanger is the modern day version of Nicolas Darvas.
His mother Elaine loved the stock market and Dan would often watch the business channel with her. One day in 1978 Dan saw a stock explode across the ticker tape at the bottom of the screen hitting $1. He made his first purchase and sold the stock a few weeks later at over $3. From that sale on, he was hooked on the action of the market tape, usually carrying a quotetrek with him to stay up on stock prices on his jobs in Beverly Hills as an independent contractor building swimming pools.
He attended a seminar led by William J. O’Neil and this was a major turning point in his ability to select winning stocks. Dan studied chart patterns 25 to 30 hours per week learning to select stocks that would make big moves, before they moved. As technology and internet stocks took center stage in the stock market in 1997, Dan began to see powerful moves underway. He sold his Porsche for approximately $11,000 to have the necessary capital to jump fully into the market. Over the next year, he parlayed the 11,000 dollars into 18 million with the knowledge acquired over two decades playing the market and re-reading the works of William O’Neil. With this success, Dan was able to become a full time trader and leave contracting behind.
He recommended Darvas’ strategy and told traders that the Darvas System is, “widely used and followed today by the best traders in the world, and still this breakout method is little understood by most…”
Dan Zanger is still a big advocate of Darvas’ teachings and he tells traders that applying the Darvas method will “yield fortunes beyond the reader’s wildest dreams.”
Dan Zanger holds the world record for one-year stock market portfolio appreciation, gaining over 29,000%. In about two years, he turned$11,000 into $42 million.
Zanger was listed by Trader Monthly magazine as one of the top 100 traders in the world with an annual income of $25 million!
Here are some great videos where he discusses his methods:
Ed Seykota Interview
Van Tharp:
Have you played around with any other significant ideas in terms of position sizing besides market’s money? If so, what are they?
If you could give me ten rules to consider with respect to position sizing what would they be?
Ed Seykota:
“Playing around” with “when market money becomes your money” seems to be an exercise in math-turbation.
I don’t know what you mean by playing around with ideas. I feel you either think things through or you don’t.
Ten rules for position sizing:
1. Bet high enough to make meaningful profits when you win.
2. Bet low enough so you are ok financially and psychologically when you lose.
3. If (1) and (2) don’t overlap, don’t trade.
4. Don’t go adding a bunch of rules that don’t work, just so you have ten rules.
Have you played around with any other significant ideas in terms of position sizing besides market’s money? If so, what are they?
If you could give me ten rules to consider with respect to position sizing what would they be?
Ed Seykota:
“Playing around” with “when market money becomes your money” seems to be an exercise in math-turbation.
I don’t know what you mean by playing around with ideas. I feel you either think things through or you don’t.
Ten rules for position sizing:
1. Bet high enough to make meaningful profits when you win.
2. Bet low enough so you are ok financially and psychologically when you lose.
3. If (1) and (2) don’t overlap, don’t trade.
4. Don’t go adding a bunch of rules that don’t work, just so you have ten rules.
Life Wisdom – Jim Rohn
Success is both a journey and a destination.
It’s the steady, measured progress toward a goal and the achievement of a goal.
Success is both an accomplishment and a wisdom that comes to those who understand the potential power of life.
It’s an awarenesss of value and the cultivation of worthwhile values through discipline.
It’s both material and spiritual, practical and mystical.
Success is a process of turning away from something in order to turn toward something better – from lethargy to exercise, from candy to fruit, from spending to investing.
Success is responding to an invitation to change, to grow, to develop, and to become – an invitation to move up to a better place in oder to gain a better vantage point.
But most of all, success is making your life what you want it to be. Considering all the possibilities, considering all the examples of others whose lives you admire, what do want from your life? That is the big question!
Remember, success is not a set of standards from our culture but rather a collection of personal values clearly defined and ultimately achieved.
It’s the steady, measured progress toward a goal and the achievement of a goal.
Success is both an accomplishment and a wisdom that comes to those who understand the potential power of life.
It’s an awarenesss of value and the cultivation of worthwhile values through discipline.
It’s both material and spiritual, practical and mystical.
Success is a process of turning away from something in order to turn toward something better – from lethargy to exercise, from candy to fruit, from spending to investing.
Success is responding to an invitation to change, to grow, to develop, and to become – an invitation to move up to a better place in oder to gain a better vantage point.
But most of all, success is making your life what you want it to be. Considering all the possibilities, considering all the examples of others whose lives you admire, what do want from your life? That is the big question!
Remember, success is not a set of standards from our culture but rather a collection of personal values clearly defined and ultimately achieved.
What is Hope ?What is Regret ?
What is Hope?
Hope is a feeling of expectation and desire for a certain thing to happen. It’s an individual’s desire to want or wish for a desired event to happen.
Hope may be the most dangerous of all human emotions when it comes to trading. Hope is what keeps a trader in a losing trade after it has hit the stop. Greed and hope are what often prevent a trader from taking profits on a winning trade. When a stock is going up, traders will often remain in the trade in the “hope” of recouping past losses. Every swing trader hopes that a losing trade will somehow become a winning trade, but stock markets are not a charity. This type of thinking is dangerous because the group (stock market) could not care less about what you hope for, or what is in your best interest. Rest assured, when your thinking slips into hope mode, the market will punish you by taking your money.
What is regret?
Regret is defined as a feeling of sadness or disappointment over something that has happened or been done, especially when it involves a loss or a missed opportunity.
The negative implications of this emotion are obvious. It is only natural for a stock trader to regret taking on a losing trade or missing a winning trade. But what is important as a trader is not to hyper focus on losing trades or missed opportunities. If you lose money on a trade, then you should simply evaluate what went wrong and move forward. Other than the lessons that can be gained from evaluating each trade, there is no point to spending further time regretting the decision to enter the trade. It is also human nature to feel regret when an opportunity is missed. If you miss a winning trade, then you must move on to the next potential trading opportunity.
When technical traders allow regret to rule their thinking, they tend to “chase trades” in the hopes of still being able to make money on the position by entering it well above the trigger price. The problem with this thinking is that the reward/risk of the trade no longer meets the parameters of good trade management. For instance, by entering a trade 1 point higher than the trigger, the potential reward may be 1 point, but the potential loss may also be 1 point. This sets the reward/risk ratio at 1 to 1. Recall that we prefer trades to have at least a 2 to 1 reward/risk ratio. However, if the trade had been entered at the appropriate trigger price, the reward/risk ratio would have been 2 to 1. Successful and profitable online traders learn to discipline their mind to eliminate regretful thinking.
Regret is defined as a feeling of sadness or disappointment over something that has happened or been done, especially when it involves a loss or a missed opportunity.
The negative implications of this emotion are obvious. It is only natural for a stock trader to regret taking on a losing trade or missing a winning trade. But what is important as a trader is not to hyper focus on losing trades or missed opportunities. If you lose money on a trade, then you should simply evaluate what went wrong and move forward. Other than the lessons that can be gained from evaluating each trade, there is no point to spending further time regretting the decision to enter the trade. It is also human nature to feel regret when an opportunity is missed. If you miss a winning trade, then you must move on to the next potential trading opportunity.
When technical traders allow regret to rule their thinking, they tend to “chase trades” in the hopes of still being able to make money on the position by entering it well above the trigger price. The problem with this thinking is that the reward/risk of the trade no longer meets the parameters of good trade management. For instance, by entering a trade 1 point higher than the trigger, the potential reward may be 1 point, but the potential loss may also be 1 point. This sets the reward/risk ratio at 1 to 1. Recall that we prefer trades to have at least a 2 to 1 reward/risk ratio. However, if the trade had been entered at the appropriate trigger price, the reward/risk ratio would have been 2 to 1. Successful and profitable online traders learn to discipline their mind to eliminate regretful thinking.
50 Trading Rules
1. Plan your trades. Trade your plan. 2. Keep records of your trading results. 3. Keep a positive attitude, no matter how much you lose. 4. Don’t take the market home. 5. Continually set higher trading goals. 6. Successful traders buy into bad news and sell into good news. 7. Successful traders are not afraid to buy high and sell low. 8. Successful traders have a well-scheduled planned time for studying the markets. 9. Successful traders isolate themselves from the opinions of others. 10. Continually strive for patience, perseverance, determination, and rational action. 11. Limit your losses – use stops! 12. Never cancel a stop loss order after you have placed it! 13. Place the stop at the time you make your trade. 14. Never get into the market because you are anxious because of waiting. 15. Avoid getting in or out of the market too often. 16. Losses make the trader studious – not profits. Take advantage of every loss to improve your knowledge of market action. 17. The
most difficult task in speculation is not prediction but self-control.
Successful trading is difficult and frustrating. You are the most
important element in the equation for success. 18. Always discipline yourself by following a pre-determined set of rules. 19. Remember that a bear market will give back in one month what a bull market has taken three months to build. 20. Don’t
ever allow a big winning trade to turn into a loser. Stop yourself out
if the market moves against you 20% from your peak profit point. 21. You must have a program, you must know your program, and you must follow your program. 22. Expect
and accept losses gracefully. Those who brood over losses always miss
the next opportunity, which more than likely will be profitable. 23. Split your profits right down the middle and never risk more than 50% of them again in the market. 24. The key to successful trading is knowing yourself and your stress point. 25. The difference between winners and losers isn’t so much native ability as it is discipline exercised in avoiding mistakes. 26. In trading as in fencing there are the quick and the dead. 27. Speech may be silver but silence is golden. Traders with the golden touch do not talk about their success. 28. Dream big dreams and think tall. Very few people set goals too high. A man becomes what he thinks about all day long. 29. Accept failure as a step towards victory. 30. Have
you taken a loss? Forget it quickly. Have you taken a profit? Forget it
even quicker! Don’t let ego and greed inhibit clear thinking and hard
work. 31. One
cannot do anything about yesterday. When one door closes, another door
opens. The greater opportunity always lies through the open door. 32. The
deepest secret for the trader is to subordinate his will to the will of
the market. The market is truth as it reflects all forces that bear
upon it. As long as he recognizes this he is safe. When he ignores this,
he is lost and doomed. 33. It’s much easier to put on a trade than to take it off. 34. If a market doesn’t do what you think it should do, get out. 35. Beware
of large positions that can control your emotions. Don’t be overly
aggressive with the market. Treat it gently by allowing your equity to
grow steadily rather than in bursts. 36. Never add to a losing position. 37. Beware of trying to pick tops or bottoms. 38. You must believe in yourself and your judgement if you expect to make a living at this game. 39. In a narrow market there is no sense in trying to anticipate what the next big movement is going to be – up or down. 40. A
loss never bothers me after I take it. I forget it overnight. But being
wrong and not taking the loss – that is what does the damage to the
pocket book and to the soul. 41. Never volunteer advice and never brag of your winnings. 42. Of all speculative blunders, there are few greater than selling what shows a profit and keeping what shows a loss. 43. Standing aside is a position. 44. It is better to be more interested in the market’s reaction to new information than in the piece of news itself. 45. If you don’t know who you are, the markets are an expensive place to find out. 46. In
the world of money, which is a world shaped by human behavior, nobody
has the foggiest notion of what will happen in the future. Mark that
word – Nobody! Thus the successful trader does not base moves on what
supposedly will happen but reacts instead to what does happen. 47. Except
in unusual circumstances, get in the habit of taking your profit too
soon. Don’t torment yourself if a trade continues winning without you.
Chances are it won’t continue long. If it does, console yourself by
thinking of all the times when liquidating early reserved gains that you
would have otherwise lost. 48. When the ship starts to sink, don’t pray – jump! 49. Lose your opinion – not your money. 50. Assimilate into your very bones a set of trading rules that works for you.
Observation and Analysis
“Do not believe in anything simply because you have heard it. Do not believe in anything simply because it is spoken and rumored by many. Do not believe in anything simply because it is found written in your religious books. Do not believe in anything merely on the authority of your teachers and elders. Do not believe in traditions because they have been handed down for many generations. But after observation and analysis, when you find that anything agrees with reason, and is conducive to the good and benefit of one and all, then accept it and live up to it.”
- Siddhārtha Gautama (Buddha)
A commitment to reason, observation and analysis (of the self-reliant empirical variety) has been a winning trade for thousands of years.
Why don’t more people practice this, in markets and in life?
- Siddhārtha Gautama (Buddha)
A commitment to reason, observation and analysis (of the self-reliant empirical variety) has been a winning trade for thousands of years.
Why don’t more people practice this, in markets and in life?
Common Characteristics between
Successful Gamblers and Successful Speculators
On a warm summer’s evenin’ on a train bound for nowhere,
I met up with the gambler; we were both too tired to sleep.
So we took turns a starin’ out the window at the darkness
‘Til boredom overtook us, and he began to speak.
He said, “Son, I’ve made my life out of readin’ people’s faces,
And knowin’ what their cards were by the way they held their eyes.
So if you don’t mind my sayin’, I can see you’re out of aces.
For a taste of your whiskey I’ll give you some advice.”
So I handed him my bottle and he drank down my last swallow.
Then he bummed a cigarette and asked me for a light.
And the night got deathly quiet, and his face lost all expression.
Said, “If you’re gonna play the game, boy, ya gotta learn to play it right.
You got to know when to hold ‘em, know when to fold ‘em,
Know when to walk away and know when to run.
You never count your money when you’re sittin’ at the table.
There’ll be time enough for countin’ when the dealin’s done.
Now Ev’ry gambler knows that the secret to survivin’
Is knowin’ what to throw away and knowing what to keep.
‘Cause ev’ry hand’s a winner and ev’ry hand’s a loser,
And the best that you can hope for is to die in your sleep.”
So when he’d finished speakin’, he turned back towards the window,
Crushed out his cigarette and faded off to sleep.
And somewhere in the darkness the gambler, he broke even.
But in his final words I found an ace that I could keep.
You got to know when to hold ‘em, know when to fold ‘em,
Know when to walk away and know when to run.
You never count your money when you’re sittin’ at the table.
There’ll be time enough for countin’ when the dealin’s done.
The 7 Habits of Highly Successful Traders
- Traders must have the perseverance to stick to trading until they break through to success. Many of the best traders are just the ones that had the strength to go through the pain, learn, and keep at it until they learned to be a success.
- Great traders cut losing trades short. The ability to accept that you are wrong when a price goes to a place that you were not expecting is the skill to push the ego aside and admit you are wrong.
- Letting a winning trade run as far as it can go in your time frame is crucial to having big enough winners to pay for all your small losing trades.
- Avoiding the risk of ruin by risking only a small portion of your capital on each trade is a skill to not get arrogant and trade too big, if you risk it all enough times you will lose it all eventually.
- Being reactive to actual price action instead of predictive of what price action will be is a winning principle I have seen in many rich traders. Letting price action give you signals is trading reality, trading your beliefs about what price should be is wishful thinking.
- Great traders are bullish in bull markets and bearish in bear markets, until the end when then trend bends.
- Great traders care more about making money more than any other thing. Proving they are right, showing off, or predicting the future is not as important as hearing the register ring.
Shut Up and Listen
Great traders are bullish in bull markets and bearish in bear markets, until the end when the trend bends.
These two rules or habits simply aren’t being utilised, either because people don’t know them, or think they’re better than them.
Let me tell you this – no-one is better than the rules. And the traders that have been ignoring them are feeling this right now where it hurts.
I know of professionals who are quitting over what the market has been doing recently. I know of professionals who are at breaking point – literally a nervous wreck because they cannot fathom that the market will go higher….and yet it does.
If you don’t follow these two rules, you will never flow with the market. You will constantly be in conflict; constantly fighting and stubbornly protecting your ‘rightness’, and you will never be in tune with what the market is saying.
These two rules can be neatly summed up in one sentence.
Shut Up and Listen.
Stop talking. Stop thinking. Just listen to what the market is telling you.
A Winning Trading Method is Really All About this…..
Many crazy over bought or over sold trends occur because one side has little pressure on it, position holders, shorts, or buyers sit tight as a trend accelerates. Equity markets rise when new money has to enter to be put to work but there is little interest at selling due to position holders sitting on winning positions.
Price resistance on a chart is caused by simply being the place that current holders are taking their profits. Price support happens at the price that people on the sidelines are ready to get back in at. These are simply spots where capital flows in and out.
Growth stocks trend higher due to the demand on it from institutional money managers, it is the flow of capital into the stock in pursuit of owning the future earnings growth that drives a stock upwards, not P/E ratios or opinions.
Finding ways to quantify and trade the flow of capital is what a winning trading method is really all about.