What it is
Nicolas Darvas, a dancer turned investor, became known in the 1950s for buying stocks breaking out of tight ranges near new highs. He drew a box around each pause in the trend and only acted when price left it.
The original method had specific rules for confirming a box top and bottom over a few days. WickSpeak's version keeps the core idea simple: the box is the highest high and lowest low of the last 20 candles, shaded so the range is easy to see, and it updates as candles close.
How it is calculated
1. Look back over the last 20 candles (the lookback setting). 2. Box top = the highest high in that window. 3. Box bottom = the lowest low in that window. 4. Shade the space between them. When price makes a new high, the top moves up with it. Note: Darvas's original rules waited for a few candles to fail to make a new high before fixing the top. WickSpeak uses the rolling high and low, which is simpler and updates every candle.
Settings
| Setting | Default | Range | What it changes |
|---|---|---|---|
| Lookback | 20 | 3 to 200 | Candles used for the box. Shorter boxes hug recent price and break often; longer boxes frame bigger consolidations. |
How to read it
How to trade it
- 1
On a 1 hour gold chart, look for a period where the box top has stayed flat for at least 8 to 10 candles.
- 2
Buy on the first candle that closes above the box top.
- 3
Place the stop just below the box bottom, or at the middle of the box if the box is very tall.
- 4
Target the box height added to the breakout level. If the box is 15 points tall, the first target is 15 points above the top.
- 5
On US30 apply the same in reverse for breaks below the box bottom when the bigger trend is down.
A Darvas breakout is proved wrong when price closes back inside the box and then below its middle, or reaches the box bottom.
WickSpeak runs in your browser with nothing to install. When you add Darvas boxes, it writes a plain-English reading on the live candle: what the indicator is, what it is doing right now, how to trade it and what would prove that reading wrong. It says how tall the current box is in points, how long the top has held, and whether price has broken out.
Darvas boxes are a drawing tool in WickSpeak and are not one of the indicator conditions in Playbook. The breakout condition in Playbook covers the same kind of range break.
Best markets and timeframes
Best in markets that trend in steps, such as gold and US indices, on 1 hour to daily charts. On 1 to 5 minute charts boxes break too often.
Common mistakes
- Buying inside the box in anticipation instead of waiting for the close above it.
- Using a box that is so tall the stop is far too wide for the target.
- Ignoring the larger trend; breakouts against it fail more often.
Works well with
Questions traders ask
What is the Darvas box strategy?
Buy when price closes above the top of a recent consolidation box, place the stop at the bottom of the box, and move the stop up as new boxes form higher. It is a trend-following breakout method.
Is the Darvas box the same as a Donchian channel?
They are closely related. A Donchian channel is the highest high and lowest low over a set period, which is how WickSpeak draws the Darvas box. Darvas's original method added rules for confirming the top and bottom.
What lookback should I use for Darvas boxes?
20 candles is a good default. Use 10 to 15 for shorter swings and 50 or more on daily charts to frame larger bases.
Does the Darvas box work on forex?
It can, but forex often ranges for long periods and breaks out falsely. It tends to work better on markets that trend in steps, such as gold and indices.