Trade Like Darvas Box Method

**Nicolas Darvas box breakouts** — the most mechanical strategy in trading history. A 1950s professional dancer turned $10,000 into $2 million in 18 months, trading from anywhere in the world with only *Barron's* magazine and telegrams. **Philosophy:** Stocks move in "boxes" — defined price ranges representing consolidation before breakouts. Capture the move from one box to the next. <strong>Purely reactive</strong>, never predictive. **The 4-step rule set:** 1. Stock makes a **new 52-week high** 2. Next **3 consecutive days** do not exceed that high → box top is defined 3. **Buy** on breakout above box top (with volume confirmation) 4. **Stop-loss** just below box top (not bottom — very tight risk) **Key principles:** - Trend following — <em>reactive, not predictive</em> - Stop-loss discipline — cut losses small, let winners run - Volume confirms the breakout - Pyramid into new higher boxes as stock advances - Darvas was a "techno-fundamentalist" — growth-industry stocks first, then box rules **Source:** *How I Made $2,000,000 in the Stock Market* by Nicolas Darvas (1960).