How I Made 2 Million Dollars in the Stock Market

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By Emil

How did a world-famous dancer with no knowledge of the stock market, or of finance in general, make 2 million dollars in the stock market in 18 months starting with only $10,000? Now you can read the remarkable story in the book “How I Made 2 Million Dollars in the Stock Market” by Nicolas Darvas.

Author: Nicolas Darvas

Subjects: (1) Trading, (2) Biography, (3) Classics

Year: 2012 (originally 1960)

Number of pages: 286

Language: English

Publisher: BN Publishing


Nicolas Darvas’ book “How I Made 2 Million Dollars in the Stock Market” is an exciting and inspiring account of a man who used a unique system to generate significant gains in the stock market. Nicolas Darvas, a professional dancer, and successful investor, shares his unique approach to the financial markets and stock analysis in this book. This ultimately led to his impressive success, where he took his initial capital of $10,000 to over $2,000,000 in under 18 months. What is more interesting is that Nicolas Darvas was Hungarian by birth but fled to Istanbul on a forged exit visa in June 1943 and eventually ended up in the USA.

The story started in 1952 when Nicolas Darvas was offered 6,000 shares in a company called Brilund, which was a payment for appearing in a nightclub with his dancing partner. Unfortunately, he could not perform that day but offered to buy the 6,000 shares for $3,000 anyway. The price at that time was 50 cents, and after two months, when Darvas had forgotten the shares, he suddenly realized the Brilund stock was quoted at $1.90, which made him a profit of close to $8,000. This exciting development made him feel “like the man who went to the races for the first time and with beginner’s luck backed every winner” (page 15). From thereon, he was hooked, and this funny coincidence marked the beginning of his financial journey. 

Over 18 months, Darvas developed the “Darvas Box System” method through continuous practice, which took him through four different phases of his investment career, from the gambling period to the fundamentalist period, to the technician period, and finally to the techno-fundamentalist period. The first period was immediately after the $8,000 profit in Brilund and meant that he made investment decisions based purely on rumors and by following hunches. It yielded poor results, with many small profits and few large losses, and he decided that if he were to go on, he “would need professional help, so I subscribed to some advisory services, which gave financial information” (page 21). Despite following the advice from professional advisory services, this also did not provide Darvas with satisfactory results. Instead, he decided to open a brokerage account in New York to start trading on the New York Stock Exchange. He began to adopt a more fundamentalist approach, going through stocks by looking at stocks with top-quality ratings, selling below book value, with strong cash positions, and so on. Despite being more methodological, he “was confronted with the same problem. When things looked perfect on paper, when balance sheets seemed right, the prospects bright, the stock market never acted accordingly” (page 45). He asked himself, “What was the value of examining company reports, studying the industry outlook, the ratings, and the price-earnings ratios? The stock that saved me from disaster was one about which I knew nothing. I picked it only for one reason – it seemed to rise” (page 62). 

It brought him to the period where he started to develop the box theory, which is in Chapter 4 of the book. I highly recommend this chapter since it contains so many gems of information. In general, the box theory is a technique based on the idea that a stock price moves in a sort of “box” pattern. When a stock price breaks out of its current “box” and into a new higher “box,” it is time to buy. If the stock price falls out of the “box,” it is time to sell. An important part of Darvas’ strategy is his focus on stocks that show a strong upward trend in price and volume. He often ignores broader market trends and instead focuses on the behaviour of individual stocks. He also refrains from reading economic forecasts and avoids letting emotions influence his investment decisions. In this chapter, you learn his redefined objectives which are (page 81):

  1. Right stocks
  2. Right timing
  3. Small losses
  4. Big profits

His weapons were:

  1. Price and volume
  2. Box theory
  3. Automatic buy-order
  4. Stop-loss sell-order

He also quickly realized that this technical approach could be married with his fundamental method where he would “select stocks on their technical action in the market, but I would only buy them when I could give improving earning power as my fundamental reason for doing so” (page 129). 

By combining the two approaches, Darvas built positions like this:

  1. Only buying the strongest stocks at a breakout from the previous trading range.
  2. Added more to the positions only when they were winning.
  3. Hard stops avoid big losses.
  4. Being long stocks only when the market itself was in an uptrend.
  5. Focus on only a few stocks to which he could devote all his time.

Despite being super successful and profitable, you get a glimpse into periods where emotions took over and made him abandon his principles, which cost him dearly. Chapter 9 is a great example hereof. The continuous joggling between winning and building his investment framework to shortly leaving his approach, which led to big failures, is one of the unique things about the book and why this book is so powerful for newcomers to the financial world.

What can we learn from Nicolas Darvas and his remarkable journey?

  • The continuous study is the key element.
    • Nicolas Darvas read some 200 books on the market and the great speculators and spent 8 hours a day studying the financial markets.
  • Avoid external resources and do the homework yourself.
    • After investing based on rumors and tips from other people, including subscribing to professional services, Darvas was still reaping dissatisfactory results in his investments. It wasn’t until he decided to do the homework himself that the results came consistently.
  • Ride trending stocks and safeguard with stop losses.
    • Buy rising growth stocks as they break out from established price ranges to all-time highs, and let them run as far as they will go. DO NOT use price target. When you are winning, add more of the winning stocks to your portfolio and have your stops in place to be ready for locking in profits.
  • Perseverance is the key requirement for success in the stock market.
    • Darvas lost a lot and could easily have jumped ship in the beginning if he let it. Instead, he kept studying and refining his methodology. It is the most important key to learning from the book, which is to make up your mind not to quit while you set out on your journey.


We have chosen to give “How I Made 2 Million Dollars in the Stock Market” the following rating:

Overall rating: 5/5

Overall, it is a highly recommended book where one learns the basics of stock market investing and, more importantly, what not to do. It doesn’t give you everything you need to build your investment framework easily, but it gives you the basics.

Style: 5/5

It is a relatively easy book to understand in terms of language. The only drawdown is that the story takes place many years ago, which you pay little attention to when reading the book.

Structure: 5/5

The structure is great. Chapters cover the different periods that Nicolas Darvas went through from novice to stock market expert.

Level: 4/5

The level is excellent and should be readable even for new investors. He uses investment terms, but with a little effort, you should be able to apprehend the meaning.

Technical: 4/5

Since the book is a gift to new investors, it is reflected in its technical level. It should be manageable, even for those without a technical background.

You can order the book from by clicking on the image below:

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