Darvas Imbalance Momentum Scaler
Family: breakout · Regime: trending · Complexity: medium · Asset classes: Equities, Forex, Crypto · Timeframes: H1, H4, D1
Thesis
The strategy is based on the hypothesis that institutional 'smart money' footprints are visible as Fair Value Gaps (FVG) specifically when price breaks out of a defined consolidation range (Darvas Box). By aligning this with long-term trend (Chandelier Exit) and smoothed momentum (Average Force/Trendilo), we filter for high-probability momentum expansion phases. The edge exists because price imbalances following a structural breakout often lead to a 'markup' phase where the gap acts as a magnet for retests or a springboard for further trend extension.
Components
- Chandelier Exit (regime) — Establishes the macro-trend regime. Only long trades are permitted when price is above the trailing stop, and short trades below.
- Average Force (direction) — Filters for momentum alignment. It ensures that the close price is favorably positioned within the high-low range relative to the zero-line.
- FVG Crosscheck (Python Definition) (entry) — Provides the specific entry trigger by identifying high-conviction institutional imbalances (Fair Value Gaps).
- Risk Reward Indicator Tool (exit) — Standardizes the exit logic by applying a fixed 1:2 risk-to-reward ratio based on the structural stop-loss.
- Darvas Boxes MetaTrader 5 (risk) — Defines the structural risk boundaries. The box edges provide objective levels for stop-loss placement and breakout confirmation.
- Trendilo MT5 (volatility_filter) — Acts as a volatility and trend-strength filter to ensure the market is not in a low-variance noise state.
Known failure conditions
- Price enters a prolonged 'sawtooth' sideways period where Darvas Boxes overlap frequently.
- Volatility drops below the ATR filter threshold in the FVG indicator for more than 50 bars.
- Average Force oscillates around zero without clear trend extension.
Explore the full interactive blueprint with parameter ranges and evidence on WOBR StrategyVerse, or generate this strategy as an MT4/MT5 Expert Advisor with QuantMogul AI Engine (free download).