A famous trader by the name of Nicolas Darvas is behind the creation of this trading sytem which is still used by most traders to date..
If interested with the story of Darvas you may read the book "How I Made $2,000,000 in the Stock Market".
The Darvas box simply used to scout for stocks that creates a new 52wk high (ATH) supported with volume and every break out from the box you add up to your existing shares and if it reverse against your box you simply get out.
With your basic knowledge on "support & resistance" that was discussed under "Charts" section then using the box method would simply filter out minor SR.
Let's go straight ahead and see how we can make use of this to our advantage.
Disclaimer: Sample charts provided are for educational purposes only.
Tools needed:
Rectangle drawing tool from your chart
➤simply drag from high to low to draw your box based from what you see on your charts.
➤notice how the price breakdown and breakout from your boxes.
➤your top most part of your box would be the resistance level, while the bottom serves as your support.
➤from the book it says to buy if it breaks out from the top of the box and cut it short if it goes back to its previous high (your top of the box).
➤now it depends on your style if you try to test buy near the bottom and sell near the top of the box.
➤notice how the price breakdown and breakout from your boxes.
➤your top most part of your box would be the resistance level, while the bottom serves as your support.
➤from the book it says to buy if it breaks out from the top of the box and cut it short if it goes back to its previous high (your top of the box).
➤now it depends on your style if you try to test buy near the bottom and sell near the top of the box.
STOCK: JFC
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| chart_from_investagrams_darvas_box_application |
STOCK: ACEN
➤with the help of Darvas box you can simply visualize clearly how a particular stock when in "sideways" before making a major movement.
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| chart_from_investagrams_darvas_box_application |
STOCK: DITO
➤another sample where the darvas system can help you get a better picture of the market sentiments.
➤while time and patience plays a key role for you to get a piece of reward from the market it's up to you how you make it to your advantage.
➤while time and patience plays a key role for you to get a piece of reward from the market it's up to you how you make it to your advantage.
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| chart_from_investagrams_darvas_box_application |
Try to pilot test for a week before you trade your real money and make notes on what you observe on the price movements.
Go ahead and try it yourself and scout your own winning stocks with the aid of Darvas box and use it wisely.
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