Friday, October 3

How to trade using Darvas Boxes

Nicolas Darvas developed his famous method for identifying stock trends using “Darvas Boxes” in the late 1950s.
His goal was to create a trading system that allowed him to ride a powerful stock’s rising trend for as long as it remained in that rising trend.
This is obviously a simple and logical concept, but extremely difficult to implement.  The difficulty lies in deciphering what is a “normal” correction within a rising trend and what is an “abnormal” correction, which breaks the rising trend.
There are numerous methods used for determining stock and commodity trends.  There’s the original Dow Theory, Jesse Livermore’s “Pivotal Points,” Richard Donchian’s moving averages, the famous Turtle breakout system, classic chart patterns, and on and on this list could stretch.  All of these methods work to a certain extent and a successful trend trader usually implements portions of each.
Like the trend trading strategies listed above, the Darvas Box System stands the test of time.
Why is that so?  Why do Darvas Boxes continue to properly identify trends more than 50 years after Nicolas Darvas first discovered their validity?
The quick answer is to quote Jesse Livermore, who famously stated,
Continue Reading

0 Comments:

Post a Comment

Note: Only a member of this blog may post a comment.

Subscribe to Post Comments [Atom]

<< Home