Daryl Guppy is founder and Director of Guppytraders.com. He is a full-time active private position trader, trading equities and associated derivatives markets. He is an appointed foundation member of the Australian Government Shareholders and Investors Advisory Council.
He is the developer of the Guppy Multiple Moving Average Indicator included in EzyChart. He delivers accredited courses for the Singapore Stock Exchange. He also runs public trading workshops, and equity and futures brokerage sponsored seminars, throughout Australia and Asia.
Classic Darvas is a trend following method based on defining the volatility range of prices over a selected period. The trend is defined by using a series of volatility boxes.
ApplicationThe classic application uses the intraday price as the trigger point for a stop loss exit. This is a stand alone trend trading technique. It is best applied to stocks that are making new 12 month highs. The Darvas box defines the stop loss conditions and the trend continuation conditions. The classic application closes the box where there is an intraday move above or below the box parameters. Darvas boxes can also be applied to any established trend, even though new annual highs have not been created. Stocks should be checked for previous compatibility with this method. It cannot be applied to short side trading.
The user selects the high to be used as the potential starting point for the Darvas box. The EzyChart and GTE Charting Darvas tool will automatically plot lower and upper box lines. When a breakout from the box occurs, the box will be automatically closed.
The user can also apply a ghost box to monitor the development of trends when no formal new Darvas box is created. This is used as a method of managing volatility and lifting the stop loss point. This is a stand alone indicator that is not combined with any other methods.
(!) EzyChart 6
EzyChart Version 6 includes Classic and Modern Darvas Boxes. You simply click a button to apply these to your entire chart.
First Published: 3 June 2013 - Copyright © Daryl Guppy
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