Swing trading
What is the Darvas Box method and how does it apply to high-growth momentum swing trades?
By Easy Money Scanner · Educational reference · Not investment advice
The short answer
The Darvas Box method identifies a stock consolidating within a defined price range (box) after making a new high, with a breakout above the box top signaling a potential continuation of the uptrend.
How it works
Momentum swing traders using Darvas Boxes typically buy on a breakout above the box ceiling and place stops just below the box floor, stacking new boxes as the stock trends higher.
An example
A high-growth stock consolidating between $80-$85 for two weeks after hitting a new high might be bought on a break above $85, with a stop placed near $79.
Risk & limitations
Darvas Boxes work best in strong trending markets and can produce repeated false breakouts and whipsaws during choppier or declining market conditions. Note: this links to a general technical-analysis association resource, not a page documenting this specific named method, so verify details against a primary source.
Examples are hypothetical, not trade recommendations. US contract and regulatory references do not automatically apply in Canada. Rules, margin requirements and broker policies can change; confirm them with the relevant authority and your broker.