Step #1: Identify at least two Darvas boxes that are on top of each other
The first trading rule is to let the market develop at least two Darvas Boxes. Basically, the two Darvas boxes are showing that the market is starting to move in steps to the downside. So at this point, the market also should be making lower highs followed by lower lows, which is the basic definition of an downtrend.
In the real world, you’ll notice that the Darvas boxes don’t perfectly stack on top of each other. You’ll rarely find a series of Darvas boxes where the following box has the bottom perfectly aligned with the top/bottom of the previous box.
You will notice that the price range of the second Darvas box can move into the space of the first Darvas box which still qualify for a valid Darvas box.
Note* Big candle wicks are ignored when drawing the Darvas box. Use the closing price instead.
Step #2: Draw a support line in the middle of the first Darvas box
We’ve noted that there is no such thing as perfection when dealing with the price action. And since the Darvas boxes tend to overlap, another characteristic is that in most of the cases the top/bottom of the current box won’t exceed the middle of the previous Darvas box.
In this case, we can anticipate that the third Darvas box will develop its top around the middle or bottom of the second Darvas box.
Step #3: How to sell QTUM: Sell when we test the middle or bottom of the 2nd Darvas Box
We want to buy low and sell high because that’s the rule number one to make consistent profits.
We sell QTUM as soon as the middle or bottom of the 2nd Darvas box is tested this will ensure that we sell on a retracement in an already proven downtrend.
Step #4: Place your protective Stop Loss above resistance level in the second Darvas Box
Our improved cryptocurrency sell strategy comes with the advantage of providing us with a very tight stop loss. We can hide our protective stop loss within or above the second Darvas box.
A break above the second Darvas box will invalidate the whole price structure and it’s wise to get out of the trade as soon as possible.
Two things can measure the success of a trading strategy.
First, how tight the stop loss is and secondly the stop loss placement needs to be logical not just a random price coming out from over-optimization.
Step #5: Take profit needs to be 2 or 3 times more than your stop loss
Opening a trade is just the beginning; you also need an exit strategy to maximize your profits. It’s often said that it’s more important where you take profits than your entry strategy
The professional traders place more weight and attention on the exit strategy because that’s how they make money. Probably, this is one of the oldest trading secrets that smart money doesn’t want you to know.
Note** the above was an example of a SELL trade using the Free QTUM cryptocurrency strategy. Use the same rules for a BUY trade – but in reverse.
The first trading rule is to let the market develop at least two Darvas Boxes. Basically, the two Darvas boxes are showing that the market is starting to move in steps to the downside. So at this point, the market also should be making lower highs followed by lower lows, which is the basic definition of an downtrend.
In the real world, you’ll notice that the Darvas boxes don’t perfectly stack on top of each other. You’ll rarely find a series of Darvas boxes where the following box has the bottom perfectly aligned with the top/bottom of the previous box.
You will notice that the price range of the second Darvas box can move into the space of the first Darvas box which still qualify for a valid Darvas box.
Note* Big candle wicks are ignored when drawing the Darvas box. Use the closing price instead.
Step #2: Draw a support line in the middle of the first Darvas box
We’ve noted that there is no such thing as perfection when dealing with the price action. And since the Darvas boxes tend to overlap, another characteristic is that in most of the cases the top/bottom of the current box won’t exceed the middle of the previous Darvas box.
In this case, we can anticipate that the third Darvas box will develop its top around the middle or bottom of the second Darvas box.
Step #3: How to sell QTUM: Sell when we test the middle or bottom of the 2nd Darvas Box
We want to buy low and sell high because that’s the rule number one to make consistent profits.
We sell QTUM as soon as the middle or bottom of the 2nd Darvas box is tested this will ensure that we sell on a retracement in an already proven downtrend.
Step #4: Place your protective Stop Loss above resistance level in the second Darvas Box
Our improved cryptocurrency sell strategy comes with the advantage of providing us with a very tight stop loss. We can hide our protective stop loss within or above the second Darvas box.
A break above the second Darvas box will invalidate the whole price structure and it’s wise to get out of the trade as soon as possible.
Two things can measure the success of a trading strategy.
First, how tight the stop loss is and secondly the stop loss placement needs to be logical not just a random price coming out from over-optimization.
Step #5: Take profit needs to be 2 or 3 times more than your stop loss
Opening a trade is just the beginning; you also need an exit strategy to maximize your profits. It’s often said that it’s more important where you take profits than your entry strategy
The professional traders place more weight and attention on the exit strategy because that’s how they make money. Probably, this is one of the oldest trading secrets that smart money doesn’t want you to know.
Note** the above was an example of a SELL trade using the Free QTUM cryptocurrency strategy. Use the same rules for a BUY trade – but in reverse.
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