The Darvas Box Method: Rules, a Worked Example and Where It Breaks
The Darvas box is a breakout method from the dancer Nicolas Darvas: after a new high, draw a box around the stock's next few highs and lows, buy when price rises out of the top, and exit if it falls below the bottom. Each new box sits higher, so the exit rises with the trend.
Nicolas Darvas was a professional dancer, not a fund manager, and the method named after him is one of the simplest breakout rules in print. It is worth knowing exactly what the rules are, and exactly how much of the story around them is verified.
How it works
Darvas described a rising stock as a stack of boxes. In the summary of his method on his Wikipedia biography (read 25 Sep 2026), he treated a price wave as a series of boxes.
While the stock stayed inside one, he waited; when it rose out of the top, he bought, and he set a stop-loss order just under the purchase price at the same time.
Later writers turned that description into mechanical rules. The version most often tested is Thomas Bulkowski’s on ThePatternSite (read 25 Sep 2026):
- Start from a new high. Bulkowski uses a new 12-month high as the trigger for a fresh box.
- The box top is that high, once the next three days all print lower highs. They do not have to fall in a row; they only have to stay under it.
- The box bottom is the lowest low from the day of the high onward, confirmed once the lows that follow it rise for three days.
- The buy is a close above the top of the box, filled at the next day’s open.
- The exit is a close below the bottom of the box, filled at the next day’s open.
Two details differ between the sources. Darvas’s own trigger, as Bulkowski describes it, was a higher high above the box rather than a close above it. And Darvas’s stop sat just under his buy price, while the tested rules exit at the box bottom. The first is quicker; the second gives the trade more room and risks more per share.
The stacking is the point. When price leaves one box and makes a new high, the process starts again, and the next box forms higher. An exit set at the bottom of the latest box therefore rises as the stock rises, without any judgment about where to move it.
That makes the method a trend-following rule as much as a breakout rule. It never tries to sell the top, it only waits to be proved wrong.
The history, and what is only reported
Darvas’s book is titled How I Made $2,000,000 in the Stock Market and was published in 1960. In it he reported receiving $2,450,000 in 18 months during the 1957 to 1958 bull market, and Time magazine covered him in 1959. That figure is his own account, not an audited record.
It was challenged at the time. According to the same Wikipedia article, New York Attorney General Louis Lefkowitz charged in 1960 that the story was “unqualifiedly false” and that his office could find ascertainable profits of only $216,000. A court blocked the investigation in January 1961 as an invasion of the free press, so the dispute was never settled on the facts.
The honest summary: the rules are real and testable, and the headline number is a claim. This page teaches the rules and does not repeat the number as a result.
A worked example
A hypothetical stock sets a new 12-month high of $50.00. The next three days print highs of $49.60, $49.80 and $49.40, all below $50.00, so the box top is $50.00.
The lows over the same stretch are $48.90, then $48.20, then $48.50, $48.70 and $48.80. After the $48.20 low, three rising lows follow, so the box bottom is $48.20. The box is $50.00 − $48.20 = $1.80 tall, which is 3.6% of the top.
A few days later the stock closes at $50.40, above the top. Under the tested rules the buy is at the next open. Suppose that open is also $50.40.
- Risk per share to the box bottom: $50.40 − $48.20 = $2.20.
- On a hypothetical $10,000 account risking 1%, or $100: $100 ÷ $2.20 = 45.45, rounded down to 45 shares.
- Money at risk: 45 × $2.20 = $99.00. Position cost: 45 × $50.40 = $2,268.00.
If the stock builds a second box higher up, say with a bottom of $52.10, the exit moves to $52.10 and the trade can no longer lose money on a close there, ignoring gaps and costs. That is the position sizing arithmetic every breakout plan needs, applied to a box.
The original data
Across the 24,971 unique videos in the site’s finance search study, 4 name Darvas in the title (case-insensitive match on the word “darvas”), from 4 different channels. Their median is 48,833 views, and 1 of the 4 passes 100,000 views: a Darvas box test at 108,586 views whose title repeats the $2 million story.
For comparison, 59 titles in the same study name Donchian channels, at a median of 10,071 views. The Darvas field is fifteen times smaller and its median nearly five times higher. Few creators teach the method; the ones who do draw a large audience, and the most watched of them leads with the disputed profit claim rather than the rules.
That gap is what the sections here cover: the rules, a worked sizing example, and the failure cases, with the famous number labeled as what it is.
When it fails
Bulkowski’s own tests are the sharpest warning. He writes that the setup “fails miserably on the daily scale” for stocks, and the better results he reports came from weekly data on exchange-traded funds. A method that only works on one timeframe and one kind of instrument deserves caution on any other.
The most common failure is the false breakout. Price closes above the top, the buy fills at the next open, and the stock drifts back into the box and out of the bottom.
The loss is the full box height plus any gap, which is why the box has to be sized before the trade, not after. The false breakout page covers why this happens so often.
Tall boxes make the risk per share large. A box that is 8% tall on a volatile stock means an 8% move against you before the exit triggers. At a fixed risk budget that shrinks the position to a handful of shares, and many traders respond by skipping the sizing step, which is where the real damage is done.
Gaps ignore the box. The exit is filled at the next open, and a stock that opens far below the box bottom after news fills there, not at the bottom. A stop loss caps the plan, not the price you get.
Sideways markets produce box after box that breaks both ways. The method has no filter for the wider trend, so in a flat market each break is a coin toss that pays the full cost of being wrong.
And the famous result is not evidence. A single trader’s reported record, disputed at the time, says nothing about how the rules perform across many stocks and many years.
Related
The breakout page explains the move a Darvas buy depends on, and how often a break fails to follow through. Stop loss covers the exit that the box bottom defines, including what happens when price gaps past it. And trend following is the wider family the method belongs to, where a rising exit and patience with winners do most of the work.
Draw the box before price leaves it, never after. If I cannot say where the bottom is while the stock is still inside the range, I do not have an exit, and a breakout with no exit is just a hope that the move keeps going.
— Michael Whitman
This page is educational, not financial advice. Test every idea on your own charts before risking money.