Username: ForexGuy Rating: Asked to: Anton Luyten Date Created: 10 Jul 2018 |
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Category | 28 |
Tag | Financial |
Question | Please give the definition of 'Darvas Box Theory'. |
Hi ForexGuy, Darvas box theory is a trading strategy that was developed in 1956 by former ballroom dancer Nicolas Darvas. Darvas' trading technique involves buying into stocks that are trading at new highs. A Darvas box is created when the price of a stock rises above the previous high but falls back to a price not far from that high. The Darvas box theory is essentially a momentum strategy. It uses market momentum theory and technical analysis to determine when to enter and exit the market, and it uses fundamental analysis to determine what to buy or sell. If the price breaks out of the box, it is a sign of a breakout. In this way, the Darvas box helps traders determine what price to enter and exit the market. |
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