Trading Tools

Bar Charts
Bar Charts are a common tool used within charting (technical analysis), with the important aspects being the High, Low, Open and Close. The Forex Backlash uses bar charts as the most basic entry. To assist traders to clearly read the bars, the following colour coding has been used.
• UP Bar = Higher High with a Higher Low, (Green).
• DOWN Bar = Lower High with a Lower Low, (Red).
• OUTSIDE Bar = Higher High with a Lower Low, (Blue).
• INSIDE Bar = Lower High and a Higher Low, (same colour as previous bar).

Simple Moving Average
The simple moving average is an indicator that smoothes out price action. Many different time frames can be used; 10 days and under is considered a fairly fast moving average which is quite reactive to price movement, but a moving average of 20 days and over is considered to be much slower and less reactive.Backlash System uses the 21-day SIMPLE moving average and is set on the CLOSE, this means the average is
calculated upon the closing prices over the past 21 days. This indicator is combined with the bar chart and the Guppy Count Back Line.

Guppy Count Back Line ENTRY (LONG)
The Guppy Count Back Line was developed by Darryl Guppy and used to identify high probability changes in trends, fine tuning entries and exits. The construction and application to charts is quite simple.
1. To create the ENTRY line for a LONG position you simply locate the LOW of the lowest bar in the current market. This bar will be labelled as Bar 1. (Should the market continue down keep moving the anchor down).
2. Then go to the HIGH of Bar 1, and draw a line to the left until you hit the first bar in-line with the high of Bar 1. This next bar is labelled Bar 2.
3. Then go to the HIGH of Bar 2, and again draw a line to the left, until you hit the next bar that is in-line with the high of Bar 2. This next bar will be labelled Bar 3. Follow that third bar to the HIGH and then draw a line to the right. This line is called the Count Back Entry Line (lower blue line).

IMPORTANT: If there is a gap between the high of any of the bars to the next bar you may need to anchor the Count Back Entry Line off the next bar to the right of Bar 1 instead.

Guppy Count Back Line Entry (SHORT)

The SHORT Trade Entry is a Count Back Line drawn in exactly the same way as the Count Back LONG Trade Entry Line, but upside-down. To create the ENTRY line for a SHORT position you simply locate the HIGH of the highest bar in the current market.
So start in reverse, anchoring from high;
1. Find the highest point in the market; this is the bar labelled as Bar 1.
2. Go to the LOW of Bar 1. And then draw a line to the left until you hit the first bar in-line with the low of Bar 1. This next bar is labelled as Bar 2.
3. You then go to the LOW of Bar 2, and again draw a line to the left, until you hit the next bar that is in-line with the low of Bar 2. This next bar we will label Bar 3. Follow that third bar to the LOW and then draw a line to the right. This line we will call our Count Back SHORT ENTRY LINE (higher blue line).

IMPORTANT NOTE: Bars 1, 2 and 3 do NOT need to be consecutive bars. As you can see in the SHORT Trade example (previous page) and also the STOP LOSS example (this page), is that when you go to either the high (long trades) or the low (short trades) of the bar and draw a line to the left, you may find that you skip over a few bars until you hit the next bar in-line with the high or low. Should you hit bars with an ‘equal’ high or low, as you can see in the SHORT Trade example (previous page) then you keep drawing until you hit a bar ‘body’ rather than a high or a low.

Guppy Count Back Line Entry STOP LOSS

The Entry Stop Loss is a Count Back Line exactly the same way as the Count Back ENTRY Lines are drawn, but upside-down (the opposite direction to the entry line).
The ANCHOR is off the entry SIGNAL BAR (detailed explanation is within Backlash System Chapter). So upside-down from the SIGNAL BAR anchor point;
1. To create the STOP LOSS line for a new LONG position you simply locate the HIGH of the SIGNAL BAR that you will enter after. This bar is indicated with a black arrow in the image above. (Details of the SIGNAL Bar are within Backlash Trading System Chapter).

2. As with every other Count Back Line, the first step is to go to the LOW of the SIGNAL Bar. And then draw a line to the left until you hit the first bar in-line with the low of the SIGNAL BAR. This next bar will be labelled Bar 2.
3. You then go to the LOW of Bar 2, and again draw a line to the left, until you hit the next bar that is in-line with the low of Bar 2. This next bar will be labelled Bar 3. Follow that third bar to the LOW and then draw a line to the right. This line we will call our entry STOP LOSS LINE.

Profit Taking
Traders have the opportunity to take profit from their trades, where they can choose to close out 30-50% of the position when a price target is hit. The Profit Taking Objective (Price TARGET) is at the 100% Guppy Count Back Line (higher blue line on a long position). LONG TRADE: The calculation to find this price objective is simply
the price difference between the initial CBL Entry ANCHOR and the Count Back Entry LINE and then added on top of the Count Back Entry LINE.

(It is the same price difference between the red anchor line to the first blue line, as it is between the two blue lines). For example; if the ANCHOR was at 1.1100 and the Count Back ENTRY Line was at 1.1200 then the difference between these two points of price is 100 pips. If we add the 100 pips on to the Count Back ENTRY Line of 1.1200, then the Price TARGET would be 1.1300. Giving the trade a 100-pip profit should the Price TARGET be reached.

Automatic triggers can be set, (Limit Orders), where traders can set a price target above their entry price where the online FX Trading Platform will automatically sell out as soon as the price target is reached, and there is no need for the trader to physically watch the computer and manually close a portion of the position to capture the profit.