Darvas Boxes

[Somenos]

I'd like to request Darvas Boxes.

 

Thanks,

 

Somenos

[Mike Medved]

Somenos - if you could point me to a good concise description of the Darvas Boxes algorithm, I would appreciate it. Everything I see so far is kinda vague and contradictory.

[Mike Medved]

Ok - I was sufficiently curious to research this and code the indicator, since it was a good exercise to test whether the indicator infrastructure is sufficiently versatile to deal with something like this. It is.

 

It will be in the next release Jerry puts out. Please check on it - there is some vagueness in various algorithms, especially on the point of how to start the box - whether the start has to be some kind of local maximum or it can be any point as long as it fits the rest of the algorithm.

[vectormix]

I think the “Darvas Box” is essentially the “Flat Base” or “rectangle tops/bottoms.”

A general flat base definition is found here:

 

http://www.breakoutwatch.com/flatBase/flatBaseHelp.html

 

A popular suggested range of the dimensions can be found here:

 

http://bit.ly/sYsw0k

 

If possible, I suggest allowing the user to define this indicator with a few key parameters held as input values--as this indicator is subjective to different user definitions.

So four key parameters for the user to set: the upward/downward trend %, the base depth %, the tolerance %, and the base length of so many bars.

To really make this cool, the upper or bottom depth lines could be linked with an automated email alert if price in real-time crosses one.

Thus, a simple first attempt at Darvas/flat bases I think would look like these charts:

 

http://www.amateur-investor.net/FlatBaseChartPattern.htm

 

Another thought which could this make this very powerful. A shorter duration of a “Darvas Box” is a “3 or 4+ Weeks Tight (3WT)” formation. They usually occur after a “Darvas Box” traditional price breakout. Again, if the user could define the major variables in the Darvas-like algorithm just like the above, a 3WT could be easily set as just another additional “Darvas Box” or whatever indicator the amazing Medveds decide to call this pattern indicator in the nifty tool. 

 

Notional Darvas Box Indicator Setting: >=20% uptrend, 15% base depth, 5% tolerance, base length between 25 to unlimited bars (days).  

 

Notional Darvas Box Indicator Setting (for a 3WT):  10% uptrend, 1% base depth, 0% tolerance, base length between 10 to 20 bars (days).

3WT Definition:

 

http://investdaily.custhelp.com/app/answers/detail/a_id/1026

 

http://www.vincedowd.com/3-weeks-tight-pattern/