A 10% stop-loss should be set on the 1st breakout. If the price of the stock moves above the top of this topmost box the stock becomes a BUY.As long as it remains there its price fluctuations should be ignored and the stock is a HOLD. A stock is in a rising trend when it is in its topmost box.The shaded danger level is indicated when the price falls 5% below the bottom of the box.If, after falling from the upper limit, the stock reaches a downward resistance point which it does not penetrate for 3 or more consecutive days, that level represents tha bottom of the box.When the price of a rapidly rising stock reaches a resistance point which it does not surpass for 3 or more consecutive days, that point represents the top of the box.the area is shaded from the bottom of the box till 5% below the bottom of the box). With the help of a graphic designer, Darvas created a visual tool called the Dar-Card, that basically shows the Darvas boxes on a chart, and a shaded danger area at the bottom of each box (i.e. Change in the initial stop loss rule, where previously it was set to 1/8 below the breakout level, now it is set to 10% below the breakout level.Change in the entry rule to look for 2 penetrations of the same box top.
The conclusion from the book is basically that the Darvas method still works, with some tweaks below: Nonetheless he waited and his patience bore fruit when he found target stocks that formed boxes and he made his money. The question then was of course whether Darvas was successful simply due to the bull market or was it because his system works.Īs the market recovered, Darvas highlighted that there were a few stocks that rose quickly without forming boxes, which cause him to question whether his system still worked. This book, You Can Still Make It In the Market, was written by Nicolas Darvas after his experiences in 1975, when he applied his Darvas box method again when the stock market was recovering from its crash from its peak around Jan 1973 to its bottom around Oct 1974 (S&P500 dropped ~50%).ĭarvas first developed and applied his methods very successfully in the 1950s when the stock market had a good bull run from 1950 to 1960 (tripled).
Readers should read the earlier review on Darvas’ first two books here: The Darvas Box Trading System by Nicolas Darvas before reading this post. This is the 3rd book I’ve read written by Nicolas Darvas.
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