Book Club: How I Made $2,000,000... by Nicolas Darvas

How I Made $2,000,000 In The Stock Market by Nicolas Darvas is a fantastic book that all traders/ investors should read. It is easily read and the message is simple: The only reason to own a stock is that its price is rising and there is no reason to sell a rising stock.

Darvas outlines his trading plan as this:

1. Find Relative strong stocks (52 week highs, stocks holding steady while market sells off, so on...)
2. Buy starter position in stock as it rises above a basing pattern with heavy volume.
3. Let stock base again.
4. Buy more stock as it rises above new basing pattern, repeat.
5. Sell all stock if it falls into lower previous basing pattern range using stop order.

This method allows you to cut your losers short, ride a trending stock and built big positions in stocks that are working, and have a defined exit to secure profit.

There are a million books that outline this same trading plan, but this may be the most effectively written because it provides a story of how Darvas came up with his trading plan and why it works. This type of writing is more powerful than textbook writing and will allow the reader to naturally absorb the trading methodology.

This book is highly recommended for everyone!