COUNT BACK LINE™
This volatility based indicator
was developed by Daryl Guppy. This volatility based entry
indicator that is defined by ‘significant’ price bars that capture
changes in volatility. Here it is shown as a stop loss tool. It can
also be used as a very effective trend break entry tool. The
applications of the count back line are discussed more fully in TREND TRADING.
Used to set a stop loss point
based on the current volatility of the stock. Used to verify and
manage continuation of a trend. This can be applied to up trends
for long side trading, or to down trends for short side trading.
It can be applied as a stand alone
indicator to protect trading capital in the early stages of a
developing trade. End of trend is signalled by a close below the
count back line. The count back line provides trailing stop loss
price level that is directly related to changes in trend volatility.
The position of the CBL entry line is calculated the most recent
high in the uptrend trend. (Most recent low in an down trend) The GuppyTraders Essentials CBL tool automatically plots the value
once the user selects the highest bar in the current up trend.
Apply to developing trends after the breakout
Can be applied as a stop loss in a mid trend
Enter as close as possible to the CBL stop
loss level. This reduces risk.
Use the count back line to verify trend
Sell after a close below the count back line.
Check for previous compatibility before
This is an end of day technique, so act only
when there is a close below the count back line (Long side
Use as a stand alone indicator as a protect
capital stop loss.
Construction rules are automatically applied
by the GTE CBL tool.
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