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ASICS www.tradersonline-mag.com 04.2014 Not all breakouts are going to be considered as signals by Darvas. January 29th price action did not violate the new base for 2 sessions, so we keep it as our reference and the Darvas Box is confirmed. This process can be automated with the use of technical indicators to be found in technical analysis software. At our website we provide you the code of the tool in Visual Chart. Please follow the link: www.tradersonline-mag. com/download/Code_DarvasBoxesAnalysis.txt In Figure 2, we can see an example of how the boxes look with a Visual Chart indicator: We notice that the indicator draws the boxes in the chart but only once they are confirmed, while it calculates internally the subsequent box. Signals Interpretation Basically, the Darvas Boxes strategy consists of waiting for the breakout of one of the box extremes and trade in F2) Signals Based on Darvas Boxes – Amazon Daily Chart this direction. However the author included an element to be taken into account for the strategy, this being the volume of the asset during the breakout. In fact, not all breakouts are going to be considered as signals by Darvas. Instead, the breakout has to come together with a volume peak (well above volume average). Each new trade comes with a stop-loss to cover the losses caused by false signals. If price moves in the proper direction and new box breakouts occur, the position is to be increased. Each new breakout comes with the corresponding position increasing. Concurrently, the stop-loss accompanies the change of boxes, at the level of the opposite side of the box. In Figure 2 we will monitor the signals provided by the method applied to Amazon. The functioning of the volume filter is evident in point B as the system does not give a signal because the breakout is not accompanied by a volume peak. However, the breakouts produced in the rest of the points match the volume conditions and consequently the long signal is given. Also in point D we observe the increasing of the position size with the new breakout in the direction of our positions. The strategy sets as an exit point the base of the box, allowing cutting of losses in the case of false signals (as happened at point A) or take your profits if the creation of new boxes accompanies the bullish movement (cases C and D). At point A, we notice a box breakout accompanied by volume increase. The stop is placed at the base of the box. Price changes its direction and the position is closed with losses. A new signal is given in point C. In this case, price moves in the direction of our position. At point D a new valid breakout occurs, so the size of our positions is increased. On December 29th price breaks the base and the system. Source: Visual Chart Conclusions Nicolas Darvas’ method is known for being very simple, as it is based in one of the main principles of technical analysis, price action and volume. Often best results come with the simplest strategies. « 56
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Page 5 and 6: TABLE OF CONTENTS PEOPLE 68 The Pro
Page 7 and 8: ADvErTOriAL Unlock your trading pot
Page 9 and 10: Coverstory That’s exactly what ha
Page 11 and 12: Coverstory revealing the line-plott
Page 13 and 14: insights - TRADERS´ Talk Listed de
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Page 35 and 36: TOOLS In the first chapter there is
Page 37 and 38: tools • Commission • Entry and
Page 39 and 40: Enjoy free money £100,000 of it Ta
Page 41 and 42: strategies markets, Relative Streng
Page 43 and 44: strategies It should also be noted
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Page 82: #1 Free Bull Flag Screen Hunt for s
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