Trail Stop Method using Darvas Box

bmcgraw393

bmcgraw393

New member
VIP
The point of this tread is for people to share trail stop ideas

Lately I have been trying to develop a new way to trail stop rather than the usual method (placing a constant percent value to sell at if crossed). I trade on 3x bull ETFs (because i'm crazy) which causes a lot of issues with the usual method; some days a single 1 min candle can move 5% while other days it will move only 0.5%. I want to develop an indicator that adapts to the average movement of the market and sets the trail stop respectively.
My first thought was to simply take the average movement of the last few candles to set the trail stop, but these ETFs will tend to have quick drastic spikes like so:



This would cause my trail stop to sell MUCH lower than wanted, because the average movement would be calculated before the spilke.
My next thought was to use a darvas box (green and red line), which helps eliminate the need to adapt to the average candle movement (the darvas box does it for you). The red line is the sell point (which i tend to sell ~1% below). As you can see, during the spike, the darvas box struggles to keep up with the new highs. Right now I cant seem to find a way around this issue, and wanted to see what others had to say about their trail stop techniques.

Feel free to weigh in!
 
Last edited by a moderator:

Similar threads

Top