Nicholas Darvas was a famous dancer in the 1950’s who wrote a book entitled "How I Made $2,000,000 In The Stock Market". This was a non-fiction book – a real, true story about how Mr. Darvas started out with around $20,000 and turned it into over two million dollars ($2,000,000) by looking through the finance section of newspapers in the evenings and applying his secret formula, the "Darvas Box Formula".

Not too many people have even heard of Darvas boxes before.  You must admit – you’ve probably never heard of Darvas boxes either.

What are Darvas Boxes?
Darvas boxes are dynamic trading range boxes that are based upon a complicated state machine algorithm. These boxes have two areas. The bottom part (red rectangle) is a stop loss area and the top part is the "break out" area. When prices broke above the top of the box, Mr. Darvas would buy if the stock was making new 12-month highs on high volume. He would then stay long and add new positions as new boxes developed. When the price of the stock dipped below the stop-loss section of the box (a percentage of the price, just below the bottom of the box), he would take profits and move on to something else. 

A Graphical Representation A Darvas box is a computed trading range as shown in figure 1. While the computation of a Darvas box is complex the interpretation of the box is simple. In a nutshell one would buy the security when prices broke out of the top of the box on high volume, typically only if the security was making a new 12 month high. If an existing position was held, one would exit the security if the price fell below the stop loss area (the bottom of the box).

Figure 1

Formula
While Darvas boxes don’t look too intimidating, I wouldn’t hesitate to say that Darvas boxes are one of the most difficult calculations we have come across in quite awhile. No technical indicator matches the level of complexity involved in calculating Darvas boxes. The entire process is like a very complex state machine. The Darvas box uses several steps to identify a top and bottom, or acceptable trading range.

Trading Potential
Darvas boxes are in just two words, extremely fascinating. The principle behind the Darvas boxes is nothing short of genius. And while calculating Darvas boxes may be intimidating to even the most savvy technical trading system developer, applying and using Darvas boxes as part of your trading strategy is extremely simple. Everything is automatic, even stop loss management. This is something you don't typically find; one box that does it all. It is no wonder that we here at Modulus have taken to using Darvas boxes in our own trading! We have developed our own trading application that scans the market for Darvas box trades on a daily basis. After thoroughly testing the scanning software for well over a year since our first Darvas box newsletter article in October of 2003, we made the scanning application available to the public on February 14th, 2005.

Introducing The New Darvas Box Scanning System Our new scanning system provides an easy way to download and scan symbols for potential Darvas box setups. Our software uses all of Mr. Darvas' rules to identify high potential Darvas box trade entries. We rank the Darvas boxes based on the formation, the price of the security, past performance, and the state of the current Darvas box (1 to 5). Each symbol is ranked with a score, with larger scores being the most likely to form a profitable Darvas trade and lower scores being less likely to form a profitable trade.

About The Software
Our software is an easy-to-use, plug-and-play application. No software programming is required to use the scanning system. You will be able to download and scan symbols immediately after installation. This is not an advisory service therefore you will not find buy and sell recommendations or portfolio management features built into the software. Instead, our software is designed to scan several securities (tens or even thousands) daily, and rank those securities with our Darvas Box Ranking System. The end result is a report list of securities that are most likely to generate profitable Darvas Box trades. Once you have the Darvas Box Rankings you can monitor those securities for a Darvas Box break out, which occurs when the price of the security breaks above a completed Darvas Box on high volume. It is highly

Data Source The Modulus FE Darvas Box Scanning System allows you to download free data from Yahoo! Finance as well as use existing CSV data files that you may already have on your hard drive. Most trading applications and data vendors provide a means of exporting data to CSV format. Complete step by step instructions are included with the software.

Scanning The Market After selecting a Data Source and clicking the OK button on the New Darvas Scan dialog box, the Modulus FE Darvas Scanning System will scan all selected symbols for Darvas box setups. You will be presented with a Darvas Scan Report (refer to figure 2) after scanning has completed. Interpreting The Report The Darvas Scan Report contains a complete list of all the symbols you scanned. The list contains the Symbol, Darvas Score, and Darvas Box State, where Score is a number ranging between -10 and +10, and the state being Started, Building, or Complete. Darvas Scores Darvas scores are calculated based on the length of the Darvas box, the current price in relation to historical prices, the stop loss range, and a number of other factors. Using The Report You can bring up a chart by double clicking on any report list item, or by selecting it and clicking the View Chart button on the dialog box. To work with the chart in the workspace view, click the Close button.

Figure 2

Professional Charting Capabilities The Modulus Darvas Box Scanner uses our StockChartX Pro component, and is therefore a complete charting solution. You can modify chart appearance properties, insert technical indicators, line studies, change price styles, layout, and much more just by right clicking on the chart! Price styles such as Renko, Kagi, Three Line Break, EquiVolume, Shaded EquiVolume, CandleVolume, and Point & Figure charts are built-in. On top of over 100 technical indicators, you can draw line studies such as Fibonacci Arcs, Retracements, Time Zones, Gann Fans, Speed Lines,  Regression Channels and much more!

  Click here fore more screenshots

 

Darvas Box Scanning System $229.00 + $5.95 S&H Includes the Modulus FE Darvas Box Scanning Software (immediate download) for use with free Yahoo! Finance data, software backup CD-ROM, 30 days free technical support and the book "How I Made $2,000,000 In The Stock Market" by Nicholas Darvas shipped to your door via FedEx*. This package includes everything you need to start trading with Darvas Boxes.
Special Offer! Darvas Box Scanning System With 10 Year Historical Data CD-ROM And Free Online Updates: $399.00 + $5.95 S&H Excellent for back-testing! Get the Darvas Box Scanning System (instant download plus backup CD-ROM), the book "How I Made $2,000,000 In The Stock Market", along with our Historical Market Data CD-ROM, which includes 10 years of historic data for all symbols listed on the NYSE, AMEX, and NASDAQ exchanges (nearly 1 gigabyte of data!) plus Forex and Global Indices data (a $199 value), and one YEAR of FREE daily online updates to keep your historical database up to date (a $360 value) all for only $399.
*FedEx shipments are for US destinations only.  USPS Express will be used for all other countries, no additional charges apply.

 

Software Requirements
Personal computer with Pentium 700-megahertz (MHz) or higher CPU, 32 MB of RAM, 10 MB of disk space plus an additional 1 MB per stock symbol, VGA or higher resolution monitor; Super VGA recommended, Microsoft Windows 98, Windows 98 Second Edition, Windows Millennium Edition (Windows Me), Windows NT 4.0 with Service Pack 6 (SP6),1 Windows 2000, or Windows XP or later.

Trading Disclaimer
Futures, option & stock trading is a high risk activity. Any action you choose to take in the markets is your own responsibility. Modulus Financial Engineering, Inc. will not be liable for any, direct or indirect, consequential or incidental damages or loss arising out of the use of this software. The information displayed by this software is neither an offer to sell nor solicitation to buy any of the securities mentioned therein. All names or products mentioned are trademarks or registered trademarks of their respective owners.