What can you learn from a trader who made 24500% return in 18 months.... | stockbee

8/31/2010

What can you learn from a trader who made 24500% return in 18 months....

Most of you have read the book " How I made 2 million in the stock market". Darvas grew his 10000 dollar account to 2.45 million in 18 months. People were so skeptical of his book and claims that the New York Attorney General investigated the claim and found it to be true.


What method did Darvas used to make that kind of money? He brought breakout to 52 weeks high after a consolidation on growth stocks with high earnings and sales growth.


How did he discover his method. By trial and error. And also he discovered the method because it is in the structure of the market. That is how growth stock operate during bull markets. That is the inherent nature of the market. That has not changed for 100 years.


The Darvas story is also about developing self efficacy belief. He did all the things most of us do at some stage. Bought penny stocks, invested on rumors, chased tips, bought lows and so many things. But ultimately he discovered his own method.





As Bandura says., of all the thoughts that affect human functioning, and standing at the very core of social cognitive theory, are self-efficacy beliefs, "people's judgments of their capabilities to organize and execute courses of action required to attain designated types of performances" . Self-efficacy beliefs provide the foundation for human motivation, well-being, and personal accomplishment. This is because unless people believe that their actions can produce the outcomes they desire, they have little incentive to act or to persevere in the face of difficulties. Much empirical evidence now supports Bandura's contention that self-efficacy beliefs touch virtually every aspect of people's lives—whether they think productively, self-debilitatingly, pessimistically or optimistically; how well they motivate themselves and persevere in the face of adversities; their vulnerability to stress and depression, and the life choices they make. Self-efficacy is also a critical determinant of self-regulation.


Persistent efforts are required for reaching that stage . But most human beings are capable of that.


But overall one thing you must understand is that one of the ways to get explosive returns in the market is to buy growth stocks breakout in bull market. Which means you need skills to determine when the market is in bullish or bearish mode, you need skills to identify growth stocks and sectors, you need skills to trade ad identify breakouts on such stocks and you need skills to exit at right time and retain those explosive gains.


Now that is a big idea worth thinking about if you want explosive gains.


For me a combination of EP+Top25 breakout+MM helps achieve that goal. But that is just one way to do it.

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