what does darvas box theory tell you 
the darvas box theory is a type of momentum strategy it uses market momentum theory along with technical analysis to determine when to enter and exit the market darvas boxes are a fairly simple indicator created by drawing a line along lows and highs as you update the highs and lows over time you will see rising boxes or falling boxes darvas box theory suggests only trading rising boxes and using the highs of the boxes that are breached to update the stop loss orders despite being a largely technical strategy darvas box theory as originally conceived did mix in some fundamental analysis to determine what stocks to target darvas believed his method worked best when applied to industries with the greatest potential to excite investors and consumers with revolutionary products he also preferred companies that had shown strong earnings over time particularly if the market overall was choppy 1the darvas box theory in practicethe darvas box theory encourages traders to focus on growth industries meaning industries that investors expect to outperform the overall market when developing the system darvas selected a few stocks from these industries and monitored their prices and trading every day while monitoring these stocks darvas used volume as the main indication as to whether a stock was ready to make a strong move once darvas noticed an unusual volume he created a darvas box with a narrow price range based on the recent highs and lows of the trading sessions inside the box the stock s low for the given time period represents the floor and the highs create the ceiling 