Nicholas Darvas invented the Darvas Box indication in the 1950s, and it is a fantastic technical analysis tool. He was a dancer who used this idea to make $2 million in 18 months trading in the market while on a global dance tour. He was able to get this sum of money for only $36000. This indicator is sometimes referred to as a classic.
What is Darvas Box?
Nicholas Darvas, a former dancer, was the first to promote this concept. He employed a unique trading strategy that resulted in a $2,000,000 profit in just 18 months. Even while on a worldwide dancing tour, he was able to make this much money by trading in the stock market. He put boxes around the price to indicate a tight range, as per the theory. The break of these boxes was then traded in the same direction as the trend. The Darvas Box hypothesis is the name of his trading theory.
How Does Darvas Box Strategy Work?
This trading strategy is based on the principle of trading stocks that have reached new highs. When a stock is regularly bouncing inside a short range, you can draw a box around it using the high and low points. The Box is formed when the price of a stock rises to new highs and then falls to a point close to the prior high. Traders can trade the stock using a defined stop-loss at the stock’s base.