Darvas Box - MetaTrader 5 Script | Trading Script Download - MT4/MT5 Resources

The chart analysis method developed by Nicolas Darvas is very popular in Europe and the United States. Although this strange and simple method is still not very popular in Russia.
Let's try to clarify this.

Darvas trading techniques are based on his new trend detection method. A buy signal is generated when a bullish trend is confirmed and a stop loss level is set. Davas uses his method to trade on the daily chart. Therefore, his approach is ideal for almost full-time traders.

Darvas uses a special filter in his work - the Darvas box. It helps Dawas determine the significance of various market movements. The filter consists of the upper and lower boundaries of the region.

The method is briefly described as follows: break through the upper boundary and buy. At this point, a stop is installed below the lower boundary. If a new area is formed, the stop loss will be moved below the lower border of the new area. The opposite situation is selling.

Here's how this area is formed.

Steps 1-2. Generation and saving of top borders.

The highest price on the first day is designated as the upper boundary of the area. In addition, if the upper limit of the area is lower than the highest price of the day, verification is performed on each subsequent day. If this is not the case, the upper boundary of the region will be moved to the new maximum point level.

If on the third day the upper boundary is higher than the day's maximum, an upper boundary should be formed (step 2) and it is time to proceed to steps 3-4. If the highest price on the day exceeds or equals the cap price, the cap will be moved to the new level and a new verification will be performed the next day. Validation is performed until the upper limit is no higher than the maximum value for the day.

Steps 3-4. Generation and preservation of the lower boundary of the region.

On the day the upper boundary is finally formed, the initial value of the lower boundary is set to the lowest price of the previous days.

The generation of the lower boundary is then similar to that of the upper boundary: when the daily maximum is above the lower boundary of the area, the lower boundary should be formed.
If the day's maximum value breaks the upper limit of the stage, the upper limit is set equal to this value and the algorithm goes to step 1.

Once the lower boundary of the region is formed, the entire region should be complete and it's time to move on to step 5.

Step 5. Wait for a buy/sell signal during this phase to track a price breakout of the upper or lower boundary of the area. If the upper boundary is exceeded, buy the asset and place a stop loss below the lower boundary

Attachment download

📎 darvasboxes.mq5 (6.65 KB)

Source: MQL5 #498