The nature of the Darvas box is a method of analyzing, determining the range and limits of fluctuations in the price of a cryptocurrency at a certain time.

When a cryptocurrency is in an uptrend, its price will not increase continuously. Instead it will return to lower prices and have fairly stable up and down fluctuations over a certain period of time. The price range where the cryptocurrency fluctuates up and down as above has created a Darvas box. The upper and lower limits of the price are the top and bottom of the box.

1. How to determine the correct Darvas box for investors

To invest effectively, of course you need to closely monitor market developments and identify darvas boxes according to the following steps:

Step 1: Identify the first Darvas box

Circle the price range where the stock moves a lot at the present time according to the instructions presented above. This will be a Darvas box and you must continue to monitor cryptocurrency price developments in the near future.

Step 2: Identify new boxes

If the cryptocurrency price goes up and surpasses the cap (top) of the original box and continues to adjust, a new box will form. The highest and lowest prices in this new period correspond to the new box lid and the new box bottom.

The size of each box represents the volatility of the cryptocurrency more or less. The larger the box, the more volatile the cryptocurrency and vice versa.

Based on these boxes, investors can make smart decisions to buy or sell to ensure always profits and limit losses when participating in the cryptocurrency market. Below we will reveal to you the most standard way to apply the Darvas box.

2. Monitor price fluctuations and draw the Darvas box

When investing in cryptocurrency, don't forget to monitor all market developments to identify the "magical" Darvas box.

When you observe that the price increases sharply and begins to have downward adjustments, then fluctuates up and down within a certain range, draw a Darvas box.

How to draw as follows:

The lid or upper limit of the box will pass through the point representing the highest price within the range. The bottom of the box or lower limit will pass through the point representing the lowest price within that range.

You should draw at least 2 boxes to firmly determine the coin's fluctuation trend before making a transaction.

3. Principles to know when applying Darvas box theory

  • Don't invest when the market is falling. You should stand outside and observe and evaluate. You should only buy cryptocurrencies when they are on the rise

  • With the cryptocurrency market, nothing is impossible. You may think that the stock price will definitely increase, but the truth is that is not necessarily the case

  • You should act according to real market developments, do not put absolute faith in coin valuation opinions

  • You should ignore all rumors about coin prices because rumors are just rumors

  • Buying coins at a high price must sell at a higher price

  • It is wise to hedge with a stop-loss order

3. Summary of Darvas box theory

The article above, Trading Insight, has provided you with quite complete information about the theory of the Darvas box as well as how to apply it effectively when investing in cryptocurrency. Wishing you success when applying the Darvas box!