What is Darvas Box Theory?
2669 reads · Last updated: December 5, 2024
The Darvas Box Theory is a technical analysis method developed by Hungarian dancer and investor Nicolas Darvas in the 1950s. This theory involves drawing price ranges (boxes) to identify buy and sell points for stocks. Specifically, when a stock price breaks above the upper limit of a previous box, Darvas considered it a buy signal; conversely, when the stock price falls below the lower limit of the current box, it is a sell signal. This method emphasizes trend-following and price momentum, with stop-loss points set to manage risk. The Darvas Box Theory is straightforward and has been used by many investors to capture trading opportunities arising from price breakouts.
