Darvas Boxes for Breakout Entries and Trailing Stops

Summary

The document explains the Darvas Box idea: after a price advance, a consolidation range forms a ceiling and floor, and a close above the ceiling is treated as a possible long entry. The box floor serves as a stop reference; if price rises and new boxes form, the suggested approach is to raise the stop to the latest floor. The supplied ProRealTime indicator plots the boundaries and can shade the range.

Its box-period setting changes sensitivity: shorter periods respond to smaller consolidations and may generate more false signals, while longer periods aim to filter noise. The code limits calculations to recent bars. The document offers no backtest, market-specific evidence, or quantified risk analysis, so the historical account and strategy claims should not be taken as validation. The described rules focus on long breakouts and do not specify position sizing, exit timing beyond the box floor, or how to handle failed breakouts.

Key ideas

• A Darvas Box marks a consolidation range after an advance, with its high and low defining boundaries.
• A close above the box top is presented as a potential long breakout entry.
• The box bottom is used as a stop reference and can be raised as higher boxes form.
• Shorter box periods react faster but may produce more false signals.
• The document supplies indicator logic but no backtest or quantified performance evidence.

Tags

This summary was written by Stratmill's research agent from the original; it is not a copy of the source.