Featured in Time magazine
Time ran a story on the dancer who made money in the stock market in its 25 May 1959 issue, making him known before the book came out
Famous Traders · Box Theory
Nicolas Darvas
Nicolas Darvas / The dancer who boxed in prices
A Hungarian cabaret dancer who was paid in shares, then taught himself to trade and created the Darvas Box: buy when price breaks out of a box and trail the stop loss up step by step. He traded by telegram while touring the world. This page lets you be Darvas one day at a time, and checks the $2 million legend against the evidence
TELEGRAMNEW YORK → ON TOUR
CLOSING 47 1/4 STOP NEW HIGH STOP BOX 44 1/4 – 47 HOLDING STOP RAISE STOP LOSS TO 44 1/8 STOP
Made-up example · in the telegram style Darvas used with his broker
Born in Hungary1920
Paid in shares1952
Box confirmation rule3 days
Claim vs what was found$2M · $216K
THE ACTS4 actsFrom gambler to fundamentalist to technician to Techno-Fundamentalist, as told in his book
THE RULE3 daysThe box top and bottom are confirmed when price doesn’t break them for 3 days in a row, then you wait for a breakout
THE CLAIM≈ 10×The New York Attorney General claimed the $2 million figure in the book was exaggerated about 10 times
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ProfileQuick facts
Full nameNicolas Darvas (Hungarian: Darvas Miklós)
NationalityHungarian; lived and worked in many countries
Born – died1920, Hungary – 1977
Main professionProfessional dancer, touring nightclubs worldwide with his half-sister Julia
Main marketUS stocks, new industries of the 1950s
Trading methodDarvas Box + stop loss below the box, deciding on closing prices and volume sent by telegram
Best known forHow I Made $2,000,000 in the Stock Market (1960) · Wall Street: The Other Las Vegas (1964)
NoteThe $2 million figure is his own claim. The New York Attorney General investigated whether it was exaggerated
02
Early lifeFrom war refugee to a dancer paid in shares
Darvas was born in Hungary in 1920 and studied economics in Budapest. In 1943, during World War II, he fled the country on a forged visa to Istanbul with very little money
After the war he made his living dancing with his half-sister Julia as Darvas & Julia, touring nightclubs around the world. The turning point came in 1952 when a Toronto nightclub offered to pay him in shares instead of cash
TOUR ROUTE · 1920–1977Tap each point to follow his life
Born in Hungary in 1920, he studied economics in Budapest before World War II changed his life
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Darvas’s thinkingThe further you are from the market, the more clearly you see the stocks, because there are no rumours or intraday prices pulling you to change your mind
Paraphrased from How I Made $2,000,000 in the Stock Market, not a direct quote
03
The four actsFour acts of learning: from gambler to system
In his book, Darvas describes his learning in stages, like a show in several acts. Each act had mistakes and lessons that built into the Box system
The gambler 1952–1953
- What he did
- After his first profit from Brilund, he believed the stock market was easy money, so he bought on rumours and tips from acquaintances, especially cheap Canadian mining stocks
- The result
- Mostly losses, because he had no reason of his own for buying and didn’t know when to sell
- Lessons
- If you can’t say where you’ll get out when you’re wrong, that’s gambling, not trading
The fundamentalist 1953–1955
- What he did
- Read financial statements and industry reports, chose stocks with good numbers such as the steel stock Jones & Laughlin, and bought on margin
- The result
- The stocks with good numbers didn’t rise. He sold at a loss of about $9,000, as told in his book
- Lessons
- A good company doesn’t mean the price will rise now. Price has to confirm first
The technician 1955–1957
- What he did
- Studied price and volume behaviour, noticing that strong stocks rise in steps, pause in a box and then break out, so he began using boxes and automatic stop losses
- The result
- Clearly better results, but when he moved close to the market in New York, he said rumours and the quotation board made him trade too often and lose discipline
- Lessons
- However good a system is, it can fail if you let noise change your decisions
Techno-fundamentalist 1957–1959
- What he did
- Chose stocks in new industries with growing earnings, such as electronics and chemicals, then used boxes to time entries, communicating with his broker by telegram while on tour
- The result
- The late-1950s bull market was when he claimed to have made the most money
- Lessons
- Fundamentals tell you what to watch, the chart tells you when to enter, and the stop loss tells you when to get out
Act 1 / 4
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Box theory labLab: be Darvas one day at a time
Every morning Darvas received a telegram with the closing prices of the stocks he followed. Read the telegrams one day at a time and see how the box forms, when price breaks out, and how the stop loss is moved up step by step
Lab · made-up dataSample stock · prices in 1950s-style fractions
Confirmed box Stop Loss Buy / sell point
Scroll the chart left and right →
TELEGRAMDAY 1
Close—
PositionWaiting for a signal
Stop Loss—
P/L—
- 1Top Price makes a new high, then doesn’t break it for the next 3 days
- 2BottomA low after the top that isn’t broken for the next 3 days
- 3Buy Price breaks above the top; set the stop below the bottom of the box
- 4Move the stop Every time a new, higher box forms
The 3-day rule is the convention used by students of Darvas’s method. In his book he explained it with examples rather than a fixed formula. The lab uses made-up data for learning
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05
Order ticketThe Darvas order ticket: Buy Stop + Stop Loss
Darvas sent a buy order above the box top together with a stop loss below the box bottom. Enter your own box: the calculator works out where to set the Buy Stop and Stop Loss, and the order size that keeps your loss within what you’re willing to lose
ORDER TICKET · made-up exampleEnter the box and your risk
ORDERXAUUSD
- BUY STOP
- —
- STOP LOSS
- —
- Stop distance
- —
- Order size
- —
- Loss if stopped out
- —
Gold 1 lot = 100 oz; a $1 move = $100 per lot · EUR/USD 1 lot = 100,000 euros; 1 pip = $10 per lot · Actual contract sizes may differ by broker
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06
The $2,000,000 questionChecking the $2 million legend
The book’s title made Darvas famous, but the figure also got him investigated. We compare the claim with verifiable records and sort them by the weight of the evidence
- May 1959 Time runs a story on the dancer who made money in the stock market
- 1960 The book goes on sale with heavy mail-order promotion. The New York Attorney General opens an investigation into the publisher and Darvas
- 1960–61 The defence argued the book was a biography, not investment advice. The lower court ruled in their favour
- 7 Jul 1961 New York’s highest appeals court reversed the ruling, letting the Attorney General continue the investigation under the Martin Act. We found no published record of the final outcome
The New York Attorney General really did investigate
The record of New York’s highest appeals court, 7 Jul 1961, states that the Attorney General investigated the publisher, Darvas and executives under the Martin Act securities law
About $2 million profit in 18 months
This figure comes from his own book. The prosecutors claimed the book exaggerated about 10 times, and no independent check has been found confirming either side
About $216,000 profit found by investigators
From news reports at the time citing the prosecutors, not a court ruling, so treat it as the other side of the dispute
It started with shares paid as a fee
The story of 6,000 Brilund shares comes from his own book and is repeated everywhere, but we found no independent document confirming the details
The Darvas Box always makes money
Breakout systems normally have false breakouts and losing streaks. No research has been found confirming that it consistently beats the market
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On the billStocks on the show bill
The stocks most often mentioned in Darvas’s story. Profit and loss figures come from his own book and are approximate
BRILUND
+≈ $8,000The shares he got as a performance fee. The price rose from 50 cents to about $1.90, the start of his fascination with the market
JONES & LAUGHLIN
−≈ $9,000Bought for its good financial statements, on margin, but the price fell. A lesson that fundamentals alone aren’t enough
E. L. BRUCE
+≈ $295,000The big deal he said changed his life, after seeing price and volume surge unusually
LORILLARD
No figures givenAn example of a stock in a changing industry; filter cigarette sales were growing fast at the time
THIOKOL
No figures givenA space-race stock, fitting the Techno-Fundamental approach: a new industry with growing earnings
TEXAS INSTRUMENTS
No figures givenA transistor maker in the early electronics boom. The stock rose in steps, the way he liked
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08
LessonsLessons for Forex and gold traders
Your checklist
0/4
Draw the box before you decide
Before trading gold or a currency pair, draw a box from the latest high and low that price hasn’t broken for several bars, then wait for a close outside the box instead of guessing the turning point
Always set the stop loss before entering
Darvas sent his buy order with a stop loss below the box bottom every time, so the order size could be worked out from the stop distance and the money he was willing to lose
Let profits run with a trailing stop
He didn’t set a fixed take profit, but moved the stop up below each new box as price climbed another step. This suits gold or currency pairs in a clear trend
Cut out the noise
He traded best when far from the market, checking prices once a day. People with day jobs can use pending orders with preset stops instead of watching the screen all day
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Quiz5-question quiz
Question 1 / 5
How did Darvas get his first shares?
As he told it, a Toronto nightclub offered to pay him in Brilund mining shares in 1952.
Where is the buy point in a Darvas Box?
He set his buy order just above the box top, letting price confirm the move.
When price forms a new, higher box, what did Darvas do with his stop loss?
This is a step-by-step trailing stop.
What does Techno-Fundamentalist mean?
Fundamentals tell you what to watch; the chart tells you when to enter.
How should you view Darvas’s $2 million figure?
The prosecutors claimed it was exaggerated about 10 times, and it has never been independently proven.
0/5
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Trade like DarvasFollow in Darvas’s footsteps: draw the box, wait for the breakout, move the stop
What you can use right away from Darvas is the discipline of the paired order: buy when price confirms, get out where you planned when you’re wrong, and let profits run with a stop that follows the boxes. Here are tools on 1TRADER that help
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Further readingFurther reading
- How I Made $2,000,000 in the Stock MarketNicolas Darvas · 1960The original: his journey from gambler to Box theory and trading by telegram while on tour
- Wall Street: The Other Las VegasNicolas Darvas · 1964A critical look at the financial industry and the traps retail investors fall into
- You Can Still Make It in the MarketNicolas Darvas · 1977A review of his principles in later markets, published the year he died
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FAQFrequently asked questions
What is the Darvas Box?
A box drawn around a stock’s pause in an uptrend. The top is the high that price doesn’t break for 3 days in a row, and the bottom is the low that isn’t broken for 3 days. You buy when price breaks above the top and place a stop loss below the bottom
Did Darvas really make $2 million?
It is a claim from his book. The New York Attorney General investigated and claimed it was exaggerated about 10 times. News reports at the time cited a figure of about $216,000 found by investigators, but no independent proof has ever settled the dispute
Can the Darvas Box be used with Forex and gold?
Yes, as a breakout and trailing-stop idea, but Forex trades 24 hours and has frequent big news, so rely mainly on bar closes. Volume in Forex is the broker’s tick volume, not the total market volume
Why did Darvas trade well while far from the market?
Because he checked closing prices once a day by telegram, didn’t hear rumours or see intraday swings, and always set his buy order and stop loss in advance
How should I start practising the Darvas Box?
Start with historical charts of the market you actually trade. Draw boxes with the 3-bar rule, note the buy points, stops and stop moves, and count the results over at least 30 trades on a demo account before using real money
Educational content, not investment advice. Darvas’s profit figures are claims from his book. The lab chart uses made-up data. · risk disclosure · Forex glossary