Another valuable technique to gain on the stock market is the box of Nicolas Darvas bestselling author of How I Made $ 2,000,000 In The Stock Market. The technique is very simple, but at the same time effective. Nicolas was looking for stock that presented the substantial volume increases. Find the stock that correspond to its criteria, he began to study the fundamentals. When he is convinced, buy on the break. For this technique you not need adx indicator or other type of indicator.
The stock market rules are:
- I am seeking a stock with a significant increase in volumes
- I analyze the fundamental of stock
- Await a correction or trading range
- Buy the breakout
- I place the stop loss below the 10% of the entry price
- Increase in the position every time recur the condition explained in point 3 and 4
- I follow the market with a trailing stop
- I close the position when the market creates a trading range and is broken down
Let’s take an example:
March 18 EZCORP INC NASDAQ has increased volumes.
April 13 the price exceeds the maximum of the box. The entry price is 4.13 and the stop loss is 3,717.
If you have questions, you can write in the comments, thanks.