Thanks! But I may disappoint. ;-(

After reading Guppy's book, which was a waste of money, and running the scripts generously provided on wealth-lab, I have become disenchanted with this style of trading.

I have since rediscovered RWI which I am now investigating. It appeals to the engineer in me in that I have never been a fan of fixed lookback intervals.

Time will tell.

Thanks!

I'm still lurking- looking forward to your resurrection

Thanks Bernard. You beat me to the punch.

I have order Darryl Guppy's book. Probably a waste of $$, but I have not read anything unique on Darvas.

It will be interesting. Took almost 2 weeks for them to acknowledge the order.

Regards,

Leap

Thanks for the link Bernard
It looks like an interesting website. I believe there are opportunities for using Darvas in both bullish and bearish markets either short term or long term. I hope that some people will come to realize how they work and might be surprised if they have had successful trades that they were using them already.
Have a Wonderful Weekend my Friend! :^)

Technical Analysis of Stocks & Commodities.

http://www.traders.com/

Hi Leap
What magazine is S & C ?

Please see this months S & C mag for a discussion of Darvas.

I am thinking about resurrecting this thread if there is any interest.

Regards

I surely am not looking to follow this thing to the letter..breaking floors and ceilings have a huge impact on trading..I have been using this study as another tool to master, widening my grasp... :)))

Of course, as noted earlier, Darvas' method involved buying stocks going into a higher box at an all time high. This is not the case with AMCC

http://finance.yahoo.com/q/bc?s=AMCC&t=5y

Anyone using Darvas' method would have made a fortune in the tech bubble, when the market retreated, the stop losses would have moved one safely to the sidelines.

The ideal candidate would be a company with a promising product or technology, that has been outperforming the market. Fix the boxes, buy on a breakout (should be at an all time high price), set a stop loss. If the stock continues to climb, consider adding more, keep the stop losses trailing the price. Let the market tell you when to get out.

OPSW..out of the box on the short side...

AMCC nearing top of the box.

You are doing the right thing
Ask Zeev about the boxes or read back in the thread a bit, there should be a link were Zeev talks about using boxes.
Good Luck Spark! :^)

All I am doing now is recognising stocks in their little boxes...as I daytrade I must admit that Zeev's flexibility is very attractive...

JDSU filling it's gap
The prior gap up from 3 looks Ok as long as it continues to hold support at 3, just be very careful that support does not breakdown. Today was a small gap down and if 3 fails to hold support you could get a repeat of last months decline, only perhaps to 2.50. Notice beginning of July the gap down under 3.50? That set up an island top for the end of June and it has not recovered 3.50 as support since then, so trend down still from that point. Any significant close below 3 and you might want to look at some Puts.
Good Luck Spark! :^)

JDSU on the bottom range of the box...

Thanks for your help.

Hi Spark
Here is a good explaination of the ADX. In the examples you can see where DMI+/DMI- crossing over each other can signal Change of trends, where the DMI+(positive) will be overtaking the DMI-(negative) or vise versa, and how the ADX is showing an indication of the Strength of that controlling trend. When the ADX is low and neither DMI+/DMI- is staying in control, as Mar to May in this chart, then it will usually be a period of consolidation. I will see if I can find some clearer examples of stocks or indices to put up later. The link explains it in more detail.
Enjoy the Day Spark! :^)
http://stockcharts.com/education/IndicatorAnalysis/indic_ADX.html

That's great info Bob...when you have time, please feel free to expound... :)))

Hi Spark
The ADX can be an indication of the trend, again it depends on the timeframe you are looking at. What you want to see for an uptrend is the DMI+ above the DMI-/ADX and both the DMI+ and ADX rising. The DMI+ is showing a controlling positive trend and the ADX is showing the Strength of that trend, so the higher the ADX usually the stronger the trend. Here you can see the differences between a 1 year and 3 month chart for LMT and the changes in the DMI/ADX readings whether long term or short term. At the http://indexpulse.com/ website you can see examples of the DMI/ADX reading we use on the intraday/2 day chart as compared to the week/5 day chart reading. It can be a useful tool both long term or short term in looking for trend strength or potential low or high signals. I am a bit tired but would be glad to help you out with a better explanation or examples tomorrow or another day.
Enjoy the Evening Spark! :^)

Volume and trend are very much key here I think. I read that for a stock to be clearly trending the ADX value should be at around 20...do you agree?

Hi Aim Hier
Yes, there could be other original factors that were considered. I have never read any of the books in entirety but am just offering my observances as to how the basic theory could be applied to everyday trades. If you have any insights you would like to offer please feel free to post them. IMO the theory could be applied to either uptrending or downtrending stocks/indices/futures.
Enjoy the Evening Aim Hier! Sincerely, Bob :^)

Hi Spark
The timeframe can be anything that you want to apply, determined by the timeframe you have set for the trade. If you want to trade a short timeframe then use a short timeframe chart to look for the support/resistance boxes, if looking to trade a long timeframe then use a long timeframe chart. The Key is targeting breakouts or breakdowns of prior support/resistance trading ranges with increased volume. Whether you want to trade ticks on the Futures intraday, a stock for scalps intraday or anything longer term the idea is to identify breakouts or breakdowns of prior support/resistance levels for entries and exits. I use it a lot when looking at stocks intraday. Here is a look at BORL on Friday that had a morning breakout of 7.25 with an increase in volume, then again breakout 7.50 with increase in volume. If I had entered anywhere over 7.25 I would have used a breakdown of that box as a stop limit. Once over 7.50 I might have added to the position. As long as 7.25, or perhaps the breakout of resistance at 7.46, did not breakdown then the stock would be a hold long. Do you see why I mention 7.46, it was the morning breakout that held later day support, so the box from 7.30-7.46 held support Above the box after it broke out on higher volume, signaling a continuation of the uptrend and a continued hold. You could use the intraday signals for an entry and then also change your targeted ranges to a longer term trade if the trend continues higher, adjusting from a short term entry to a longer term hold determined on whether a trading range box has broken down support or continues to uptrend. The idea is to Stay in the trend as long as possible, and perhaps adding to your position along the way, but stopping out when a level (box) that should have held support (like your entry) has broken down.
I hope this helps. Sincerely, Bob :^)

I believe Darvas had some additional requirements. First the stock has to be in a company that is doing something new and different. That is, it has some new product or service that may be the catalyst to produce great profits. If a company is doing what it has always done, why expect it to perform differently in the future? Secondly, the box it is in, should be the highest box it has ever occupied. In other words, it should be at all time highs. By setting a tight stop loss, Darvas risked a moderate loss against a large gain.

I've long been intrigued by Darvas' books and methods, but don't yet use this strategy myself. As Darvas pointed out, you also need a strong bull broad market to operate in. We don't currently have that yet, unfortunately.

Thanks Bob...that helps quite a bit. I have read that for the trend to be firmly established in this method most use 3 days as a time period to establish the high, and then the low inside the box..do you agree?..Here is an excerpt from the site you gave me:

How to use the boxes...

The placement of the stop loss (and, actually, the decision to buy or sell) really varies from implementation to implementation. I believe Darvas' original interpretation was to only buy when there was a pattern of boxes stacking on top of each other and to place the stop loss at the top of the previous box. My program uses the low that's not penetrated for three days (after the top has definitively been formed and remains unpenetrated (the high of the box is always drawn first; the bottom is set only once the top has been formed (and remains unpenetrated throughout the establishment of the bottom)).

In its strictest interpretation, I'd look for at least three boxes, with each subsequent box being higher than the one before and then place a buy order if it penetrates the latest box to the upside. In addition, I place the constraint that any penetration of the box is only to the upside (a penetration of the bottom, or to the downside, should automatically trigger a stop loss).

In summary: my personal requirements are much stricter than Darvas' original method. I require the breakouts to be to the upside and require at least three stacked boxes with upside breakouts. The sell signal would be whenever it broke through the bottom of the latest (or last) box.

Hi Spark
The timeframe can be any that you choose to use. You can break the boxes down to intraday ticks or stretch them out to daily, weekly, monthly, yearly price levels, whichever timeframe you choose to box the pricing. Here is a look at a SINA 6 month chart, where Darvas could have been used for a downtrending stock. Can you identify any of the breakdowns of prior price 'boxes' on increasing volume? A longer term short might have used the recovery of 30 in mid May as a cover, or if the prior trading range was identified as $5 boxes might have covered in mid May at 25. Then either looked to play the upside or just wait for the downtrending boxes to re-establish the downtrend. On the lower LSCP chart intraday Friday can you see any 'box' breakouts on volume where the Darvas method could have been applied? It can be used for any timeframe you wish to apply it to.
I hope this helps. Sincerely, Bob :^)

Thanks. Do the rules change for short time periods intraday or doesn't it work at all? tia

I am not sure
There might be some trading software platforms that will do it. Here is an old website that used to work and has some calculations for Darvis http://www.sethi.org/investments/darvas/index.phtml
The system is relatively simple to use and identify if you want to try to apply it. If you read through the board posts, there are not too many, then it might give you some further insights. If not then just ask and I will try to help. The primary idea is identifying the trend and breakouts/breakdowns of that trend for entries/exits.
I hope this helps Spark. Sincerely, Bob :^)

Is there a charting site that automatically puts Darvas boxes in your chart when you punch in a symbol? tia

The trading range is important
RYL prior ranges 80-85, 75-80, so breakdowns of those boxes tested new lows 70-75, would anticipate downtrend to possibly continue below 70 from resistance at 75, using Darvas method in a downtrend. PHCC a wide trading range but not much of a trend, prior trading ranges could still be targeted for 'box' moves, support to resistance, but Darvas was primarily developed to use with a trending stock, watching breakouts or breakdowns of prior trading ranges to identify the trend for entries/exits. Without much of a trend you could still use it with PHCC when identifying moves that could retest the prior trading range, as with today's move above 22 retesting 23. Now hard to tell if 23 will breakout and hold support or retest 22 for support or breakdown to 21/20. The 'box' method would still apply but imo it works best with a trend, as I think it was designed that way.
Enjoy the Day David! :^)

Great charts and great call on SIE. SIE was reported by my system 17 times already as reaching new 3 days highs after being filtered for the items mentioned previously.

Another one that's been good today is RYL (Note: up to 11:00 am - cant speak for what it will do the rest of today)
http://www.trade-ideas.com/StockInfo/RYL/Ryland_Group.html

Also liked PHCC earlier today.
http://www.trade-ideas.com/StockInfo/PHCC/Priority_HealthcareB.html

You still need good position management and skill in managing your P&L - but at least this system brings you to the water.

Best,

Hi David
That scan looks as though it would work. SIE prior boxes in $2 ranges and this move back above 46 might retest top of the 46-48 box. Longer term box ranges look to be in $4 ranges 38-42, 42-46. I hope you can find something to work for you.
Enjoy the Day! :^)

Thanks bbgold. Here are some alert windows based on my interpretation of the Darvas method.

You'll have to be a member to see the stock symbols, otherwise you'll still be able to see the configuration.

This alert window first creates the following conditions stocks must satisfy: be trading at least 50% above their normal current volume at all times, have a maximum spread of 8 cents, have already experienced 3 days of range expansion (increasing difference between high and low of the day - 3 days in a row), and be in the top half of its trading range of the current day.

Then and only then will it alert you of the following activity via the alerts: reaching new 3 day Highs, Running up in price, and breaking 3 day resistance lines.

Take a look:
http://www.trade-ideas.com/View.php?O=2000000000000000000040010_3d_0&QNHPF=3&QRU=6&QCDHR...

I may work on a Darvas breakout where the range is contracting for a few days and then suddenly breaks out the range on volume and makes new short term highs.

An Interesting website Trade
I am not sure if Darvas can be applied to a scan without first determining the previous trading ranges and timeframe you want to look at for continuation? There might be a way to use your website for tracking but it looks too complicated for me to figure it out right now.
Very Cool Link Trade, thanks. Sincerely, Bob :^)

Hi Sam O
Darvas could be applied to a PnF chart. What you would want to determine is the trading timeframe you want to watch, then look for breakouts of prior trading range clusters, boxed to whatever timeframe you were using. Here is a longer term PnF for the DIA that shows where prior boxes of trading range were broken out and held higher support. Any breakdown of a prior 'box' area, below the bottom of the previous box, would be a potential breakdown of the trend and a signal to sell or go short. You can see in this longer term example that the DIA has been trading in prior 30-40 pt boxes since early 03, and the spikes into higher areas have seen eventual continuation, perhaps with the exception of the last spike high in Jan? Not sure if this is what you are asking, I hope it helps. Sincerely, Bob :^)

Let's create some examples to illustrate.

If I could filter for anything, how would a Darvas filter work? Expanding volume to me means a stock that is trading x% above what it normally trades for the time period (let's say the day). For example all stocks trading 50% above their normal trading volume.

The expanding range I assume refers to the stock price. I have a filter that can simultaneously look for stocks that are trading unusually high volume and are in the midst of an expanding or a contracting range.

Here is a list of filters available to me. What filters and then alerts would you choose?
http://www.trade-ideas.com/Config.php?dest=View.php&O=3_3d_0&WN=FREE+High%2FLow+Ticker

Anyone know who uses this Darvas in for PnF.. what is the set up ?

Tripping the boxes?
It will be interesting to see if the dip below 10100 was a headfake or another test to start filling a lower box.
Keep Rocking Bernard! :^)

Hi Steve, trading has been alright, not extremely good, but not losing money either. I've been spending a lot of time to transform myself from a discretionary trader to a system trader, with not much success. I have a bunch of good rules and potential trading systems, with good money management systems, but I can't seem to really put them in place and form an automatic trading system... sometimes, my emotion kicks in and makes things even harder...

I have no idea where the market is heading, but it seems INDU wants to retest 10k at least...

Hi Bernard
I do not have E-signal and I do not use the Darvas method per se. I think zeev's version of Darvas Box makes more sense. He is combining I think Darvas Box's with Channel trading.

By that I mean, he sees the stock as trending (channeling) up or down and thus his boxes are sloping with the trend channel.
A stock may be in a horizontal shannel as well and then the price parameters stay pretty firm.

How is trading bernard.

I took longer term bullish positions that are under water but being I can't trade them intra-day, I am letting them go for now. I do not want to see the Dow close under the 200 day though. A tag seems quite likely here but I don't really know.

Good trading Bernard

steve

Hi Steve, if you use eSignal, I know you can get a Darvas Box script, and automate the whole drawing process... I have it now, and don't see how it can help my trading... now I'm trying to use Zeev's interpretation of box trading...

Markets close middle of the Box
Just as most of the indicators have reset to 0 so have the Markets settled right in the middle of the support and resistance. We could go either way next week and perhaps test both the top and bottom of the Box again, maybe. TNX closed early due to the holiday so not sure if it ending the day above it's Intraday SMAs will be any indication that the Markets are holding support.
Have a Wonderful Weekend Everyone! :^)

Hi Leap,
I think that there are a Lot of possibilities for the Darvas Method.
Good Luck Leapyear! :^)

I am on sabatical. Looking to evolve this board into something more useful.

Leap

Thanks Bernard,
I always wondered if they were related to each other or not :^)

Hi Bob, eSignal is not part of eTrade... I haven't used it, but as far as I know eSignal has the most reliable data.

Hi Bernard,
Is eSignal part of eTrade? I have never used either of them. Have you had good experiences with either? I am all for the Free stuff <GG> :^)

Hi Bob, I don't know any free software for back testing... however if you use eSignal's trial offer, it's "free" to do your back testing... ggg

This chart might be easier to read
It looks as though the closing prices were close to 8350 with 8250 the lows of the day. You can see on Jan 2nd where the previous resistance was broken (of a 2 day box?) and the markets rallied hard. I hope that this helps :^)
>

How about Q as a Trending stock?
You can see how using the Box theory with previous resistance becoming support and previous support becoming resistance could have been used while Q was uptrending and again when it was downtrending. You can almost just use the grids in the chart for the boxes as the stocks support and resistance levels switched at nearly every 50 cent level. If Long from $4 in Dec you would have continued buying shares on the breakouts and finally stopped out on the move back below 5.50. You can see where you could have used the Darvas boxes in reverse with the move back below 5.50 in Jan. You can also see how using the SMAs switching from support to resistance would have worked. Too bad I keep being forgetful about following Trending stocks Eh? Hopefully this will help some others looking into the Darvas method and how it could be applied in either an uptrend or downtrend :^)

PAYX really put on the moves today
You can use the grids on the chart as the Boxes between 24.50, 25 and 25.50 and see where the breakouts and breakdowns could have triggered some good intraday trades. I really like the EOD move where 25 held support, which would have been right at the bottom of the 25 - 25.50 box. It is not on this chart but the Volume spiked on the 2 PM breakout of $25 and again after it held support. The Darvas method can indeed be used with any timeframe IMO. Notice where the SMAs also changed from resistance to support? Either method for triggering a trade should work :^)