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Hi,
When the price backed by solid volume, breaches support and
resistance levels, support becomes resistance and resistance becomes
support...
So, I'm unable to fully refute the Darvas Box method.... It is a
sort of a continuation signal... Maybe this is what was missing from
my tool box in conquering this continuation signal nightmare and
ecstacy, now that I have solved the mystery of the breakout's and
trend-change pullbacks...
Ironically, Continuation signal is at the same time, my worst and my
best signal...
If somebody can refute it, I will be greatful to hear it...
Regards,
Pal
--- In amibroker@xxxxxxxxxxxxxxx, harveyhp <harveyhp@xxxx> wrote:
> Here is Darvas's own description.
>
> P.51. "Within this trend stocks moved in a series of frames, or
what I
> began to call "boxes".
> They would oscillate fairly consistently between a low and a
high
> point. The area which enclosed this up-and-down movement
represented the
> box or frame. ...
> When the boxes of a stock in which I was interested stood,
like a
> pyramid, on top of each other, and my stock was in the highest box,
I
> started to watch it. It could bounce between the top and the
bottom of the
> box and I was perfectly satisfied. Once I had decided on the
dimensions of
> the box, the stock could do what it liked, but only within that
frame. In
> fact, if it did not bounce up and down inside that box I was
worried.
> No bouncing, no movement, meant it was not a lively stock.
And if it
> was not a lively stock I was not interested in it because that
meant it
> would probably not rise dynamically.
> ... But, of course, the movement the movement I was
constantly
> watching for was an upward thrust toward the next box. If this
occurred I
> bought the stock.
> ... While it stayed within its box, I considered a reaction
from 55
> to 50 as quite normal. It did not mean the stock was going to fall
> back. Just the contrary.
> Before a dancer leaps into the air he goes into a crouch to
set
> himself for the spring. I found it was the same with stocks."
>
> That's pretty much the whole description of the boxes - just
support and
> resistance levels. There is no secret formula. All I could find
about a
> percentage below the low price was one statement near the end of
the book,
> where he bought four stocks and "On each of these stocks I put a
stop-loss
> order of 10 per cent below buying price." High volume, yes:
P.61. "My
> selections were high-volume stocks anyway."
> This was the 1950's when personal computers were far in the
future. Darvas
> doesn't even mention charting the stocks by hand.
>
> HHP
> =====================
>
> At 04:27 PM 30/09/2003, you wrote:
>
>
> >Note: forwarded message attached.
> >
> >
> >
> >Modulus Financial Engineering
> >Trading Edge Newsletter for October 2003
> >
> >This issue 3-2003: How I Made $2,000,000 In The Stock Market"
> >
> >The risk of loss in trading can be substantial. You should
therefore
> >carefully consider whether such trading is suitable for you in
> >consideration of your financial condition. In no event shall
Modulus
> >Financial Engineering be responsible for your trading losses.
> >
> >Darvas Boxes
> >The Astonishing Secret!
> >
> >Nicholas Darvas was a famous dancer in the 1950s who wrote a book
entitled
> >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 $2 million by looking through the finance
section of
> >newspapers in the evenings and applying his secret formula.
> >
> >The author describes his investing style as a narrative. He takes
you
> >through his investing evolution step by step, detailing his actual
> >experiences. I must say, his writing style made the book very easy
to
> >follow and understand. The book emphasizes both technical and
fundamental
> >criteria, both key ingredients to proper trading and investing.
> >
> >Not too many people have even heard of Darvas boxes before. You
have to
> >admit, you probably never heard (or at least used) Darvas boxes
either! I
> >learned about Darvas boxes recently and have been experimenting
with them.
> >Today, a client of Modulus FE called to chat with me. He is a
famous
> >trader, a well respected man and a wonderful client. I tried to
pick his
> >brains about Darvas boxes. To my amazement, he had never even
heard of
> >them! Darvas box? What? Never heard of it, son!
> >
> >I first learned about Darvas boxes when a client of ours requested
the
> >calculations and graphics to be programmed into our StockChartX
ActiveX
> >component. It took us more than one go at it, but we did manage to
get it
> >right after exhausting just about every bit of information we
could get
> >our hands on. I spent the next three days in solitude just playing
with
> >these boxes. Yes, they are that amazing! I am now experimenting
and back
> >testing several systems based solely upon Darvas boxes. I am also
> >experimenting with a Darvas scanning system, which scans thousands
of
> >stocks each day. If this works out then you can expect to see it
listed on
> >our site as a web service! You just have to try the boxes. They
are amazing!!!
> >
> >How To Use
> >Darvas boxes are dynamic trading range boxes that are based upon a
> >complicated state machine algorithm. These boxes have two areas.
The
> >bottom part is a stop loss area and the top part is the break out
area.
> >When prices break 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 something else. If you're wondering what Darvas boxes look
like,
> >take a peak at our
<http://www.investor.net/charts.asp>Investor.net
> >charting page. Look at the 2nd picture, on the bottom left.
> >
> >Formula
> >While Darvas boxes may not look too intimidating, I will not
hesitate to
> >say that Darvas boxes are one of THE most difficult calculations I
have
> >come across in quite awhile. The entire process is like a complex
state
> >machine. The Darvas box uses several steps to identify a top and
bottom,
> >or acceptable trading range. Explaining how these boxes are
calculated
> >could easily consume several pages. Your best bet would be to
purchase the
> >book from Amazon, or purchase our StockChartX component (with or
without
> >the source code) if you want to get started using Darvas boxes
right away.
> >
> >StockChartX Makes It Easy
> >You can skip the hurdles and simply call one method of
StockChartX:
> >ShowDarvasBoxes()
> >StockChartX is the only charting component in the world that
calculates
> >Darvas boxes. Furthermore, there are only three complete end user
> >applications in existence that calculate Darvas boxes, and one of
them
> >does it incorrectly!
> >
> >To purchase StockChartX, visit
> ><https://secure.modulusfe.com/order/default.asp#stx4>
> >2c0eb4a.jpg
> >
>
><https://secure.modulusfe.com/order/default.asp#stx4>https://secure.m
odulusfe.com/order
> >
> >The component comes with our 30 day risk free product guarantee.
> >Use it in Excel, VB, VB.net, C#, C++, Delphi or FoxPro for
personal use or
> >commercial use.
> >
> >If you already own a license to StockChartX, simply redownload to
get the
> >latest version, which includes the Darvas boxes. Refer to your
original
> >invoice email for download instructions.
> >
> >Or, to get the book
<http://www.modulusfe.com/newsletters/TE100103.asp>How
> >I Made $2,000,000 In The Stock Market
> >
> >Yours Truly,
> >Tom Wong
> >Modulus Financial Engineering
> ><mailto:t.wong@x...>t.wong@xxxx
> >MCSD, MCP
> >
> >You may reprint and redistribute this article so long as the
signature,
> >copyright and link remain.
> >
> >Copyright(c) 2003 by <http://www.modulusfe.com>Modulus Financial
Engineering
> >
> >
> >
> >
> >If you received this email in error or would like to unsubscribe,
please
> ><http://www.modulusfe.com/remove.asp>click here. This email is
sent in
> >accordance with U.S. Bill S.1618 Title III passed by the 105th
> >U.S.congress. Please do not reply to this message, as this email
supports
> >outgoing email only. Copyright 2003 - Modulus Financial
Engineering.
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