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(as mentioned in Stocks & Commodities
magazine)
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Intraday Darvas Box
Scanner
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Nicholas Darvas was a famous dancer in the 1950’s who wrote the book "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, unless you read the recent Stocks &
Commodities Magazine article.
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 another stock.
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
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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 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
a scanner plug-in for our Market Data Manager
system that scans the market for Darvas box trades on a daily or
intraday basis.
After thoroughly testing the scanning engine 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 as a stand-alone application. On July 11th of 2005 we
made the scanner available as a plug-in for our new super-fast Market
Data Manager Scanning System.
About The Darvas Box Scanner
Our Darvas Box scanner is an easy-to-use, plug-and-play application. No
software programming is required to use the scanning system. You
will be able to scan the stock market 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) on an
intraday basis, 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  recommended that you read the book "How
I Made $2,000,000 In The Stock Market" to gain a solid understanding of how
Darvas Boxes came about and how they work. The book in conjunction with our
scanner will help you identify Darvas Box trades. You get a
free copy of the book with your order of the Modulus FE Darvas Box
Scanning Scanner.
Interpreting The Report
The Darvas Scan Report contains a complete list of all the symbols
scanned every few minutes..
Darvas Box scan reports are presented to you all throughout the
day!
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.
Professional Charting
Capabilities
This scanner is designed to work with the Market
Data Manager, which is also 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 for ordering information.
View the Market Data Manager in Action!
View the
presentation video
Darvas Box scans are completely customizable.
The Darvas Box Scanner in action.
Click on any item in the report to view the
associated stock chart.
INTRADAY DARVAS SCANS IN SECONDS!
Why's it So Fast?
To find out why, just take a look at our RMD
Server product, if you're technically inclined. Otherwise we
recommend watching the 10-minute demo presentation to see the
scanners in action:
View the
presentation video
Darvas boxes require monitoring of volume.
The built-in Equivolume and Candlevolume charts
are great for this!
The Darvas Box
Scanner requires the Market Data Manager in order to run:
Click here for ordering information.
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