Darvas box theory suggests only trading rising boxes and using the highs of the boxes that are breached to update the stop-loss orders. Despite being a largely technical strategy, Darvas box theory as originally conceived did mix in some fundamental analysis to determine what stocks to target. Darvas believed his method worked best when applied to industries with the greatest potential to excite investors and consumers with revolutionary products. He also preferred companies that had shown strong earnings over time, particularly if the market overall was choppy.
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The Darvas box theory encourages traders to focus on growth industries , meaning industries that investors expect to outperform the overall market. While monitoring these stocks, Darvas used volume as the main indication as to whether a stock was ready to make a strong move. Once Darvas noticed an unusual volume, he created a Darvas box with a narrow price range based off the recent highs and lows of the trading sessions. When the stock broke through the ceiling of the current box, Darvas would buy the stock and use the ceiling of the breached box as the stop-loss for the position.
As more boxes were breached, Darvas would add to the trade and move the stop-loss order up.
How I Made $2,000,000 in the Stock Market [Paperback]
The trade would generally end when the stop-loss order was triggered. While traveling as a dancer in the s, Darvas obtained copies of The Wall Street Journal and Barron's , but only used the listed stock prices to determine his investments. Today, there are variations to the Darvas box theory that focus on different time periods to establish the boxes or simply integrate other technical tools that follow similar principles like support and resistance bands. Darvas' initial strategy was created at a time when information flow was much slower and there was no such thing as real time charting.
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Despite that, the theory is such that trades can be identified and entry and exit points set applying the boxes to the chart even now. It is fair to say that following the Darvas box theory will produce small losses overall when the trend doesn't develop as planned. A couple of the points he makes that stood out for me was, don't read or listen to the Wall Street pundits.
Whenever he did, he lost money. And two, don't take your broker's advice. That one may be a moot point with all the available low cost and no cost trading tools that are available today. January 16, - Published on Amazon. Bought this one for my husband so could have his own copy.
How I Made $2,000,000 In the Stock Market
Love this book. January 25, - Published on Amazon.
This book's title is a summary of its ending doing it injustice. A first hand description of this author's struggle in trading stocks and developing his own strategy. Covering a few years in the s, it is admirable how at that time this one man with no training from anyone else was able to establish his own stocks trading strategy. All on his own he discovers support and resistance, range and trend, buy stop entries and stop loss exits. All tools and concepts that we take for granted in our day and age.
How I Made $2,, In The Stock Market by Nicolas Darvas
He was also able to identify his trading psychology issues and device ways to handle them. Very enjoyable reading. August 31, - Published on Amazon. Like Livermore's "Reminiscences I'm shocked that it took me this long to getting around to reading it. Making money is as simply as this: buy stocks that are rising.
click here In other works buy high and sell higher. May 27, - Published on Amazon. This weekend I had assigned myself the task of reading what many consider to be some trading classics, including this one by Darvas. First, let me get my criticisms out of the way: On this particular Kindle version, there appears to be many textual anomalies. They do not make it unreadable, but they are distracting.
I don't believe Darvas fully divulges his stock picking strategy. Without that, a lot of the book was meaningless to me. Now the positives: I really was floored by how insightful this man was into trading, especially when it came to what I would consider a topic which resonates today: information overload. The book describes his unique "Box System", which he used to buy and sell stocks. Darvas' book remains a classic stock market text to this day. Darvas is legendary, and with good reason.
Find out why. This product is manufactured on demand using CD-R recordable media. Convert currency. Add to Basket. Book Description Lyle Stuart, Condition: New. Seller Inventory ZZN. More information about this seller Contact this seller. New Condition, Paperback book, Seller Inventory Seller Inventory M Never used!.