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As everyone can see, there is much confusion about how to draw the
"correct" boxes.
After looking at various examples on the 'net, I based my code almost
entirely on <A
href="">http://www.gerryco.com/tech/darvas.html.
My code inside the 'for' loop is essentially just implementing the state machine
presented on that site.
However, I became interested in Darvas after attending the last Perth
Sunday Traders Club meeting where Frank Watkins made a presentation on his
ProTrader software. One of the pictures (p17) in Frank's booklet "Darvas
Box Trading" suggests that his software requires the first new high to be a
New n-day High. I have not seen this requirement mentioned anywhere else
and my code does not use this precondition. I also did not add this
requirement as I was trying to get into a new trend closer to the bottom than
this would otherwise allow. YMMW.
As Stan said, what Darvas is basically looking for is a new High that
is not exceeded for 2 subsequent days, followed by a new Low that is not
penetrated for 2 subsequent days. (This is why you can't use
functions like HHV() and LLV() directly out-of-the-box to construct Darvas
Boxes. You can of course - it just gets messy). The Low may also be
the Low of the day of the first New High. This works well in an uptrend
but sucks in a down trend. However, if we are only to trade longs, then
these rules work well.
There are many shortcomings of the rules as strictly presented.
One in particular that I noticed was that after a sharp drop into a
bottom, the top of the Darvas box is stuck back at a long-inconsequential,
old-time High. This is because we cannot claim to have found a box until a
qualified Low is found after a qualified High. It just happens that
in a downtrend the last qualified High is often a long time ago. Therefore
we don't get our first Buy signal out of the bottom until that long-old High is
broken. But no mechanical system is perfect to we'd all better just
get used to it.
I have drawn "Darvas Channels". This so that I could see the boxes
form as the days progressed but also to cater for the Hard Right Edge (see next
paragraph). As each Low is violated, the state machine re-syncs and the
bottom of the box is moved lower. But my code does not go back and fixup
the box (channel) bottom. Same situation as each new High is made; the top
of the box (channel) gets moved up. So my boxes are not "the same" as
examples seen elsewhere but the meat of the box, once it's
formed, should be absolutely correct.
I chose not to draw boxes strictly according to Darvas.
However, the code could be modified to go back and fix things up ("And the Angel
wants to go back and fix things. To repair the things that have been
broken" - Laurie Anderson's "The Dream Before"). I chose this because
at the Hard Right Edge boxes are only partially
formed. It is not until some time in the future that we have all
the information need to construct the box. i.e. the box often cannot be
validly drawn until after price has broken out of the box and the Buy signal has
occurred. Too late! I prefer to see the box forming. I also
prefer NOT to see things drawn one way one day and suddenly change the
next. YMMW.
Let's keep in mind that strict adherence to the Darvas rules are not what's
important here; it's whether what we come up with can be used to make
money. No mechanical system is perfect. Let's get over the "Holy
Grail"-itis. It's like people who ask whether a 20 day (E)MA is better
than a 21 or 25 or 'n' day (E)MA. Sheesh! Get over it and trade
the sucker.
Anyway, I hope this explanation helps people to understand my code and
helps them decide how they would like to modify it if they choose.
Enjoy.
Ciao!
Paul
CRITICISMHe has the right to
criticizewho has the heart to help. -
Abraham Lincoln
<BLOCKQUOTE
>
----- Original Message -----
<DIV
>From:
<A title=gkavanagh@xxxxxxxxxxxxx
href="">Graham
To: <A title=amibroker@xxxxxxxxxxxxxxx
href="">amibroker@xxxxxxxxxxxxxxx
Sent: Thursday, 18 September 2003 4:13
PM
Subject: RE: [amibroker] Re: Darvas Box
Indicator?
Here is a MS code for one from<A
href="">http://www.euro-info.com.pl/kr/AFM/e-w-Darvas_Box.htmlDarvas
Box
LowL:=If(Low=LLV(Low,5),Low,If(Ref(Low,-1)=LLV(Low,5),Ref(Low,-1),If(Ref(Low,-2)=LLV(Low,5),Ref(Low,-2),If(Ref(Low,-3)=LLV(Low,5),Ref(Low,-3),If(Ref(Low,-4)=LLV(Low,5),Ref(Low,-4),0)))));NewH:=ValueWhen(1,High>Ref(HHV(High,5),-1),High);box1:=HHV(High,3)<HHV(High,4);box2:=ValueWhen(1,BarsSince(High>Ref(HHV(High,5),-1))=3
AND
box1=true,NewH);box3:=ValueWhen(1,BarsSince(High>Ref(HHV(High,5),-1))=3
AND
box1=true,LowL);TopBox:=box2;BottomBox:=box3;TopBox;BottomBox;Cheers,Graham<A
href="">http://groups.msn.com/ASXShareTrading<A
href="">http://groups.msn.com/FMSAustralia-----Original
Message-----From: stvd2002 [mailto:stanvol@xxxxxxxxxxxxxx] Sent:
Thursday, 18 September 2003 4:05 PMTo:
amibroker@xxxxxxxxxxxxxxxSubject: [amibroker] Re: Darvas Box
Indicator?I know, and I believe the script for wealthlab is
written on the the basis of this <A
href="">http://www.gerryco.com/tech/darvas.htmlBut
I've installed Guppy trader essential software and it draws the bottoms of
some boxes differently. I realy cannot comment on the proper
definition on the construction. Maybe <A
href="">http://www.gerryco.com/tech/darvas.html
is the correct definition and the software from <A
href="">http://www.guppytraders-essentials.com
could draw them incorrectly, which I doubt. Anybody
can download a trial version and see for themselves. I apologise for
confusing everyone :-)Stan--- In
amibroker@xxxxxxxxxxxxxxx, "Stephane Carrasset" <nenapacwanfr@xxxx>
wrote:> Tha darvas box in box.dll have been written according to
> <A
href="">http://www.gerryco.com/tech/darvas.html>
> stephane> > The top of the box is established when the
stock does not touchor > > penetrate a previously set new high
for three consecutive days.> > This is true in reverse for the
bottom of the box. The bottom > > starts one day after the
top. > > > > But I'm not 100% sure either because I
don't have the book> myself. > > Anyone who has
the book please feel free to correct me.> > > >
Stan> > > > > > --- In
amibroker@xxxxxxxxxxxxxxx, "mleonsprint"<mleonsprint@xxxx> >
> wrote:> > > What do you consider a correct "Darvas"
box?> > > > > > > >
> --- In amibroker@xxxxxxxxxxxxxxx, "stvd2002"
<stanvol@xxxx>wrote:> > > > I'm also currently
experimenting with darvas boxes,> > unfortunately> > >
> the box.dll in the 3rd party draw them inaccurately.> > >
> > > > > There is a script on a WealthLab site that
draws darvasboxes, > > but> > > > again it draws
them inaccurately.> > > > > > > >
However I could be wrong, because I've noticed that samepeople >
> > have> > > > different definitions of how to
construct them, therefore I> > admit> > > > that I'm
bit confused myself :-)> > > > > > > >
There is a software from Australian trader by the name ofDaryl >
> > > Guppy and his softWare draws them correctly.> > >
> <A
href="">http://www.guppytraders-essentials.com/>
> > > > > > > > > > >
Regards> > > > Stan> > > > > > >
> --- In amibroker@xxxxxxxxxxxxxxx, "mroman59"
<mroman59@xxxx>> > wrote:> > > > > Hello,
has anyone heard of or tried to create a Darvas Box> > > >
> indicator? The Darvas Box investing technique derives from
> > the> > > > > books How I made $2 million in
the Stock Market by Nicolas> > > Darvas.> > > >
> If anyone has come across any websites that could assitsin >
> > > > programing code for this indicator, I would
greatly> appreciate> > > it.> > > > >
> > > > > Thank You> > > > >
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