Based on the work of Nicolas Darvas, Darvas Box — part of the DS Essentials package — is essentially a support/resistance indicator and a trading methodology rolled into one. It is implemented as an overlay in Technician. While the indicator will run on any bar interval it is best used on higher intervals (i.e., weekly/monthly) with strong securities in a strong trend. The logic behind the construction of the Darvas Box is somewhat complex but the usage is fairly straightforward. Once you have a closed box (a blue box assuming the default settings) you wait for a close (or a high) above the box on higher volume for a buy signal or a close (or a low) below the box on higher volume for a sell signal. The stop would generally be set just past the other side of the box. As new boxes form while you are in a trade you would add to the trade on new breakouts and the stop would also be trailed to the most recent box. When used strictly as an indicator, the Darvas Box is an excellent mechanism to identify trading ranges on all bar intervals.

A full discussion of Darvas theory as well as the various trading methodologies that have been formulated is beyond the scope of this document. Needless to say, there are numerous websites available that discuss Darvas theory in great detail and provide insights into successfully using Darvas in today’s markets.

The full Darvas Box user guide can be found on the Divergence Software website here: http://www.sr-analyst.com/ChartIQHelp/index.html

It should not be assumed that past performance is any guarantee of future results. Results obtained from the use of the DS Essentials Indicator Collection for ChartIQ indicators or any information provided in this User Guide are not guaranteed to be profitable. It should be understood that investing or speculating in the financial markets involves risk and may result in either a partial or total loss of one’s investment capital. The information presented in this User Guide is believed to be reliable, but cannot be guaranteed as to its accuracy or completeness.

Divergence Software, Inc. and/or its principals and employees will accept no liability whatsoever for any loss arising from any use of the DS Essentials Indicator Collection for ChartIQ indicators, or the information contained in this User Guide. Neither Divergence Software, Inc. nor ChartIQ offer trading advice of any kind and we are solely involved in the business of financial software development and education.

Reproduction, duplication, or redistribution of the indicators or any material in this User Guide, in any form, without prior written permission from Divergence Software, Inc. is strictly prohibited.

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