Guppy-cbl[1]
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Trend Trading a high probability approach The 3 day Count back line Module 4
The objectives for a Count back line Entry ¾ To enter early in the start of an uptrend ¾ To allow pyramiding ¾ To establish entry target ¾ To set an initial stop loss ¾ To set a
maximum ‘no chase’ entry price
Count Back Line ENTRY Rules ¾ Use
latest Pivot point low as start point ¾ Ignore lower highs as you count back ¾ Draw entry line @ 3 highs up ¾ Include high of start point and gaps ¾ Enter day after closes above 3 day CBL
Count Back Line ENTRY Rules Continued
Best results: above downtrend line ¾ No chasing above no chase line ¾ Set stop loss: 3 day Count back from recent peak after pivot low ¾ Parcel sizing based on stop loss: max 2% portfolio risk ¾
Downtrend line No Chase Line 3-Day Countback line
p
o
n
Objectives of a Count Back Line EXIT ¾ To lock in profits with a trailing stop loss ¾ To allow room for the share to move ¾ To exit close to the top of an uptrend
Count Back Line EXIT Rules ¾ Use latest peak high as start point ¾ Ignore higher lows as you count back ¾ Draw CBL stop loss line @ 3 lows down ¾ Include low of start point and gaps ¾ Ratchet up CBL as share reaches higher
peaks
Count Back Line EXIT Rules Continued ¾ If 2 peaks at same price, use the one that
gives highest CBL ¾ Exit day after closes below 3 day CBL ¾ Beware of selling near trend line support ¾ But definite exit confirmation if closes below trend line and 3 day CBL
q p
o n
q 9.17
p 9.10 o
8.90
Exit 1 Exit 2
n
8.59
“ I usually stress that this is not a stand alone tool, ie z
z
I apply it after a trend line break and after a GMMA confirmation. I use it as a stop loss in a long trend after a trend line break and after the GMMA indicates the break is for real.”
Daryl Guppy 21 July 03
The objectives for a Count back line Entry ¾ To enter early in the start of an uptrend ¾ To allow pyramiding ¾ To establish entry target ¾ To set an initial stop loss ¾ To set a
maximum ‘no chase’ entry price
Count Back Line ENTRY Rules ¾ Use
latest Pivot point low as start point ¾ Ignore lower highs as you count back ¾ Draw entry line @ 3 highs up ¾ Include high of start point and gaps ¾ Enter day after closes above 3 day CBL
Count Back Line ENTRY Rules Continued
Best results: above downtrend line ¾ No chasing above no chase line ¾ Set stop loss: 3 day Count back from recent peak after pivot low ¾ Parcel sizing based on stop loss: max 2% portfolio risk ¾
Downtrend line No Chase Line 3-Day Countback line
p
o
n
Objectives of a Count Back Line EXIT ¾ To lock in profits with a trailing stop loss ¾ To allow room for the share to move ¾ To exit close to the top of an uptrend
Count Back Line EXIT Rules ¾ Use latest peak high as start point ¾ Ignore higher lows as you count back ¾ Draw CBL stop loss line @ 3 lows down ¾ Include low of start point and gaps ¾ Ratchet up CBL as share reaches higher
peaks
Count Back Line EXIT Rules Continued ¾ If 2 peaks at same price, use the one that
gives highest CBL ¾ Exit day after closes below 3 day CBL ¾ Beware of selling near trend line support ¾ But definite exit confirmation if closes below trend line and 3 day CBL
q p
o n
q 9.17
p 9.10 o
8.90
Exit 1 Exit 2
n
8.59
“ I usually stress that this is not a stand alone tool, ie z
z
I apply it after a trend line break and after a GMMA confirmation. I use it as a stop loss in a long trend after a trend line break and after the GMMA indicates the break is for real.”
Daryl Guppy 21 July 03
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