Darvas Box
Breakout

A Darvas box forms when a stock trades in a tight range after a significant advance. Breaking above the box high with volume signals continuation. Ride the next leg up until a new box forms at a higher level.

Box BreakoutDaily3:1 R:RModerateMomentum Stocks
52-wk high
Required
1.5× vol
Breakout
Deploy This Strategy See Rules

Rules & Configuration

The full rule set, required indicators, suggested configuration, execution flow, and performance parameters for the Darvas Box Breakout setup.

A Darvas box forms when a stock trades in a tight range after a significant advance. Breaking above the box high with volume signals continuation. Ride the next leg up until a new box forms at a higher level.

Indicators Used
Donchian ChannelVolume
Rules
📈 Box Break Long
  • Stock has made a 52-week high recently
  • Price now consolidating: new high, then pullback, holding range for 5-15 days
  • Box high = recent 52-week high; box low = recent pullback low
  • Volume contracts during box formation (consolidation)
  • Wait for close above box high on volume surge (>1.5× avg)
  • Enter long on breakout day close
  • Stop: at or just below box low
  • Trail stop up as new boxes form at higher levels
52-wk high
Required
1.5× vol
Breakout
💡 Pro Tip

Darvas' original rule: only trade stocks making new 52-week highs with strong earnings. This is not a mean-reversion or oversold strategy. It's pure strength-on-strength. Filter for momentum stocks, not value plays.

Common questions

What is the Darvas Box Breakout strategy?

A Darvas box forms when a stock trades in a tight range after a significant advance. Breaking above the box high with volume signals continuation. Ride the next leg up until a new box forms at a higher level.

What's the pro tip for trading Darvas Box Breakout?

Darvas' original rule: only trade stocks making new 52-week highs with strong earnings. This is not a mean-reversion or oversold strategy. It's pure strength-on-strength. Filter for momentum stocks, not value plays.

What indicators does the Darvas Box Breakout strategy use?

The Darvas Box Breakout strategy uses the following indicators: Donchian Channel, Volume. These can be configured directly in AlgoBars AlgoBuilder.

What timeframe works best for Darvas Box Breakout?

The Darvas Box Breakout strategy is best traded on the Daily timeframe. This can be adjusted based on your trading style and market conditions.

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