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Trading & Options · Profile from Trading and Options Research Companion

Nicolas Darvas

The Hungarian-born ballroom dancer (1920–1977) who, by his own account and Time's, made more than $2,000,000 trading US stocks by cable and telegram while touring nightclubs in 1957–59, wrote it up in How I Made $2,000,000 in the Stock Market (American Research Council, Larchmont, New York, 1960), and became the subject of the first New York Attorney General action under a broadened state law against fraud in investment advice. The state's chief accountant could find only ~$216,000 of "ascertainable" profit and called the story "unqualifiedly false" (Time, 19 Dec 1960); Darvas called the action "book burning by publicity". The courts then fought over whether the state could even investigate a book: the trial court threw out the order (30 Dec 1960), the Appellate Division agreed (11 Apr 1961), and the New York Court of Appeals reversed and reinstated it on 7 Jul 1961 (10 N.Y.2d 108). No public finding of how the inquiry finally ended was found by this batch. His "box" method — buy a rising stock as it breaks above a trading range, with a stop just below — is graded D in this knowledge base (Darvas box). He is the book's standard case of a story that can be told precisely and checked only partly.

At a glance

Born / died
Born 1920 in Hungary; died 1977 in Paris (Wikipedia; exact dates not confirmed — verify). Trained in economics at the University of Budapest; left Hungary for Istanbul in Jun 1943 with a forged exit visa and £50 (Wikipedia)
Type
Individual trader (own account) and author; a professional dancer with his half-sister Julia. This profile has five moves (rule 6 allows 5–7 for individuals): almost everything about his trading comes from his own book and two magazine reports
Markets
NYSE and American Stock Exchange growth stocks of the late 1950s (E. L. Bruce, Universal Controls and others named in Time, 1959); earlier Canadian penny stocks (from memory, verify)
Scale (dated, reported)
"A fortune of more than $2,000,000" (Time, 25 May 1959 — Darvas's own account as reported); "$2,450,000 in 18 months" in the 1957–58 market (Wikipedia and a blog summary of the book — secondary); ~$216,000 of profits the New York Attorney General's office could trace (Time, 19 Dec 1960); state investigators conceded they could not trace all his accounts in Manhattan, Panama and Switzerland (Time, 1960)
Book
How I Made $2,000,000 in the Stock Market (American Research Council, Larchmont, N.Y., 1960 — Internet Archive catalogue record); ~120,000 copies sold by Dec 1960 (Time); in print since
Regulators and courts
New York Attorney General Louis J. Lefkowitz under the Martin Act (General Business Law Art. 23-A, §§352–354); Supreme Court, Special Term (Epstein J., 29 Misc.2d 777, 30 Dec 1960); Appellate Division (13 A.D.2d 75, 11 Apr 1961); Court of Appeals (10 N.Y.2d 108, 7 Jul 1961, Froessel J.); US Supreme Court certiorari denied (368 U.S. 947; date not confirmed — verify)
Signature moves (incl. failures)
First shares and the gambling years (1952–56); the box method traded by cable on tour (1957–59); the 1960 book and its publisher; the Lefkowitz inquiry (1960–61); later books and the legacy (1964–77)

5 strategic moves analysed

Each one gets a full strategy file in the companion: context, the decision, the financing, what happened, and the lesson.

  1. 1952

    First Shares and the Gambling Years

    Start of a career / losses and learning (failure)

  2. 1957

    Box Method by Cable on Tour

    New strategy / large trades (reported)

  3. 1960

    How I Made 2000000 and American Research Council

    Publication and distribution (education business)

  4. 1960

    Lefkowitz Martin Act Inquiry

    Regulatory, enforcement or legal action

  5. 1964

    Later Books and the Darvas Legacy

    Education business / strategy pivot (from cheerleader to critic of Wall Street, then back)