Nirvana’s

GMMA 2.0 NEW Plug-in for OmniTrader and VisualTrader

Powerful New
Trading Methods
by Australia’s Daryl Guppy

Featuring:
•Count Back Line:
Adapts to Volatility in Any Chart

•Trend Volatility Line:

Stay in Trade; Avoid Whipsaws

Also Includes the Guppy

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Multiple Moving Averages

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FR r Str GuppE O

Systems and Indicators

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 Harnessing the Trading Brilliance
of Daryl Guppy
Daryl Guppy is one of the most
innovative Technical Analysts I have
had the pleasure to work with. About
7 years ago, we teamed up with Guppy
to build a special product for OmniTrader
called GMMA, based on his proprietary
Guppy Multiple Moving Average
Ed Downs concept.
CEO and Founder
Nirvana Systems, Inc. On its initial release in 2003, GMMA
was a great success among our customers,
and many swear by the visual power of GMMA in their
charts. Many have also found the original Systems we built
around the GMMA concept to be powerful prospecting
tools for their trading. GMMA 2.0 represents not only an
improvement on the original plug-in, but it also includes two
of Guppy’s latest discoveries.

Count Back Lines Concept GMMA on the DJIA. The strongest expansion and contraction
points confirmed trend changes from January to August 2010.
The Count Back Line (CBL) is closely related to the GMMA
concept because it is designed to adapt to changing volatility The GMMA concept is based on 12 different Moving Averages.
of a market. The CBL concept is one of the key Trade Entry It is the composite picture of these averages that provides a
and Stop Management techniques Guppy teaches in his powerful view of trend. As Daryl teaches in his seminars and book,
seminars and writings. See his article on page 4. the expansion and contraction of the lines gives clues as to what
stage a new trend is in, and also the stability of the trend.
The TVL Breakthrough
The Guppy Multiple Moving Average indicator is designed to
Since the original introduction of GMMA, Guppy has understand the behavior of traders vs. investors. This behavior
developed an exciting new technique based on GMMA is independent from the price behavior, but it is derived from price
called the Trend Volatility Line. He explains the concept in behavior. The structure of the GMMA captures the fractal behavior
his article on page 6. By generating lines based on the slower in the market and the way this behavior repeats. The GMMA
group of Moving Averages, and adjusting these lines when the analysis method rests on the relationships between each group of
upper average crosses the prior line, a step-wise trailing stop is Moving Averages and also between the groups.
created that does a much better job than a traditional trailing Compression shows agreement. Expansion shows disagreement.
stop. The TVL method has not been released and is currently When the long term group is widely separated it shows strong
not available to anyone outside of this offering! investor commitment to the trend. When the two groups of
averages are consistently separated it shows trend consistency
Powerful Additions for OmniTrader or VisualTrader because traders are not prepared to let prices retreat too far before
they become buyers again.
This year, we once again worked with Guppy to create
Indicators, Systems, and Strategies based on these two The relationship in each group of averages, and the relationships
powerful concepts. Daryl mostly teaches how to visually between the groups provide the primary analysis for the application
confirm trades using these methods, but we were able of the GMMA. And this analysis is independent of price.
to combine them to create our profitable Guppy Power
The original GMMA is a powerful concept that has helped many
Strategy—a free bonus that comes with GMMA 2.0 if you
OmniTrader users over the years. The new TVL method builds on
order by the deadline (see page 10). We are very proud to the GMMA to provide a powerful, systematic way to trade with the
bring this powerful GMMA collection to our customers. trend and stay with it.
Guppy Power!
A Fabulous
New Tool for
Trading Any
Market!
Daryl Guppy is famous world-
wide for his Guppy Multiple
Moving Average approach to
trading. Guppy’s Count Back
Line (CBL), offers a method for
triggering entries, calculating
maximum risk, and establishing
profit-protection conditions—a
complete approach to trading
the markets!

Triggering Entries
The Count Back Line System
offers a precise method for
triggering entries, and is easily
customizable for both Real Time
and End-of-Day trading. The
concept is based on “counting
back” from an established low
or Pivot Point to establish an Guppy Power Strategy: Signals are based on the Count Back Line concept developed
entry level. by Daryl Guppy. The CBL Trailing Profit Stop adjusts dynamically to price, providing an
optimal exit point.
After the Pivot has been
identified, the system counts
back 3 highs (for Longs) or 3
your profits—the Guppy Trailing CBL the best dynamic, volatility-adjusted
lows (for Shorts) to identify the
Stop. This stop uses the Count Back stop methods we’ve ever seen.
level at which an entry will be
Line as a trailing profit stop. The stop
triggered. An entry is signaled when After implementing Guppy’s CBL
uses a “running CBL” that automatically
price closes beyond the CBL, as indicator, we combined the entry
updates as the trade progresses.
defined in Guppy’s article on pages technique with the trailing stop to
4-5. It’s a great way to identify an In the case of a short trade, when a new produce the amazing Guppy Power
entry level for a trade, because it low is reached, the trailing stop counts Strategy described on page 10. Of
adapts to the volatility of the market. back three highs and sets the stop at course, the Plug-in includes Guppy’s
the CBL. original work as well. There is
Maximizing Profits You can customize the CBL stop for
nothing like GMMA 2.0 anywhere.
It is a winner!
Once you begin to ride a winning trade, different markets, as described in
the CBL provides a great way to protect Guppy’s article on CBL. It’s one of

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 The Master of Multiple Moving Averages
Explains the CBL Concepts
The following is an excerpt
from GUPPY TRADING
published by John Wiley.

The Count Back Line:

A Better Way to See Volatility
Volatility and changes in volatility define the modern
market. The increased speed of trade execution means the
consequences of emotional thinking flow more rapidly
through the market. Many old measures of volatility do
not serve traders well because they are time dependant.
The Count Back Line, or CBL, is a self adjusting volatility Figure 1 – Deriving the Count Back Line
indicator and it continues to serve traders well with the
increases in modern market volatility.

The indicator uses three significant days to calculate the

volatility barrier which must be overcome before a change in
trend direction is signaled. The number of days between the
three significant days may be as little as three, or stretch out
to 10 or 15 days in a consolidating market. It is this flexibility
in the time component of the calculation that makes this a
self adjusting volatility stop for both entries and exits.

CBL Entries
The following discussion will center on a Long trading
example, but the same method, in reverse, works for going
Short. When the trend is up and we want to get long, we first
Figure 2 – Entering the Trade
wait for a short-term decline. Whenever prices make a new
low, we draw a horizontal line from the high of that bar to
the left until we hit a bar with a higher high. Ignore any price
gaps and move to the next bar in the current trend.

Then we draw another horizontal line from the high of that

bar to the left again, until it hits a bar with an even higher
high in the current trend, again ignoring any price gaps. From
the top of that third bar we draw another horizontal line—
but this one pointing to the right, forward into the future.

The confirmation signal is a close above the Count Back

Line. The entry is taken on the next bar (daily or Intraday
timeframes). It does not matter if the next candle is a down
candle. In fact this gives a cheaper entry.

Figure 3 – CBL Trailing Stop Loss

4
 Trade Management
Figure 4 shows a continuation of the breakout. As soon as there
is a close above the CBL line used as an entry then the CBL
calculation is reversed—the day of the confirmed breakout is
counted as the first new high in a new uptrend. This breakout
high is used as a reference point to calculate the CBL stop loss.

To construct the stop loss, we start with the new high, move to
the bottom of the candle and across to the left to the next lower
candle. Then, move down to the bottom of the second candle,
and then to the left to the next lowest candle. At the bottom of
the third significant candle draw a line to the right. This is the
Figure 4 – CBL Trailing Stop (uptrend) Count Back Stop Loss line.

Every time a new high is made, the CBL calculation is

repeated. This creates a trailing stop loss. However, this moving
line does not travel parallel to the trend. It skips from level to
level, depending on volatility, indicating new temporary areas of
minor support and resistance.

As the market moves, the Count Back Line moves with it and
keeps us out of trades that would be out of line with the market
sentiment. Temporary up-ticks or down-ticks that masquerade
as breakouts are ignored because they do not close across
the Count Back Line. The buffer created by the support or
resistance lines helps to affirm the potential for a serious long-
term price move, rather than a temporary flutter.
Figure 5 – CBL Protective Stop (down trend)
Markets often narrow down before taking off in a new
If the market closes above this line tomorrow, it will give us direction. This consolidation pattern is recognized and charted
a buy signal. We repeat this process each day that the market by many indicators. The Count Back Line recognizes it also and
makes a new low, creating a moving support/resistance line that tightens its support or resistance line in tune with the market, so
follows the market on the way down, its placement determined that when the breakout comes we can catch it early.
by the recent highs. (Figure 1)

The objective is to locate the pivot point low of the down trend
Works in Any Market
as quickly as possible. This is rarely going to be the next day The CBL method is an effective measure of price volatility.
following the pivot point low. However this does provide a Originally applied to stocks, we find this volatility method is
very early warning signal of a trend line trend break and more suitable for indexes, currencies and derivatives. It can be applied
importantly, a sustainable trend break. (Figure 2) to End-of-Day charts and to Intraday charts.
Usually the CBL is used to verify an existing trend breakout The OmniTrader CBL System allows users to optimize the
signal. In the chart example we use a down trend line, but this CBL for any trading instrument. I am quite pleased with the
could be generated by a Moving Average Crossover or any other way Nirvana successfully combined it with the TVL (see article
analysis methods. These early signals are not acted upon until on page 6) to help with the initial entry into a trend.
they are verified by a close above the Count Back Line. Highs
equal to the value of the Count Back Line, or closes equal to the Author’s note: The Count Back Line builds on work done by Joe
Count Back Line are ignored. Stowell with his 3 bar net line. The CBL includes some modifications
so the name was changed to avoid confusion with Stowell’s work.

5
 The Trader and the Trend
By Daryl Guppy

The GMMA chart allows traders to develop effective analysis The objective is to enter the trend in such a way that the
about the strength of the trend based on the degree of separation probability of a price volatility retreat is substantially reduced.
in the long term GMMA. This observation is the foundation The exit signal is the first Close below the break even line. The
of the GMMA Trend Volatility Line. This trend trade break even line is used as a the stop loss until the next set of
management technique is built on a change in the way we view conditions are met. Any price volatility exit signals generated in
the relationship between the trader and the trend. this period are ignored. In this chart example we show a CBL
exit signal generated early in the trade development.
In the past, traders have accepted that there is an objective
measurement of the trend and that this is used by all traders.
The position of a Count Back Line or a trend line does not
change depending on trader, or on the point where the trader
enters the trend.

This is an excellent solution if we believe that price volatility

defines trend behavior. It is not so good if trend behavior
is different from price volatility. The GMMA provides an
alternative way of understanding trend behavior and delivers a
method of managing the trader’s exposure to the trend based
on his entry point.

Trend Volatility
The concept of using trend volatility to manage the trade starts
with the trader’s selected entry point. In this example we show
the entry point at $50.00. The entry point at $50.00 is used as
the initial stop loss calculation. Based on the entry point we
project a line to the right. We call this the break even line. Later
we explain the detail of this line. For the moment we concentrate The relationship between the value of the break even line and
in the way it is used to manage and define the trend in relation the development of the GMMA is the important feature of the
to the trade. TVL method. When the lower edge of the long term GMMA
crosses the value of the break even line then the trader has
confirmation of trend sustainability.

The GMMA is used to measure the trend strength. It’s an

extension of the foundation concepts of the GMMA and
allows the trader to take two important steps. The first step
is the calculation of how high to lift the stop loss to follow
the developing trend. The usual solution is to measure price
volatility. The new solution is to measure the volatility of the
trend as shown by the GMMA.

The vertical distance between the 30 Period Exponential

Moving Average (EMA) and the 60 EMA —the long term
GMMA—shows the current amplitude of the trend, which is
independent of the volatility of price. In the early stages of the
trend the amplitude is small. As a sustainable trend develops, the
long term GMMA develops wider separation. This shows an
increase in the amplitude of the trend.

6
 TVL defines how you will manage the volatility risk
based on the price and time of your entry.

Using TVL for Intraday Trading

The TVL concept was developed in the volatile markets
of 2008 for Intraday trading of indexes. The chart below is
a Real Time index trade. The points A, B and C show the
calculation points for the TVL.

The current amplitude provides a solution for how high the

stop loss should be adjusted. In the chart example the stop loss
is lifted from $50.00 to $60.00. The method uses a measure of
the amplitude of the trend to determine the appropriate stop
loss adjustment level.

The vertical projection is halted when it reaches the value of

the 30 EMA. From this point a line is projected to the right.
This defines the period of time for which this stop loss is
appropriate. The duration is not known in advance.

The time to recalculate the stop loss is signaled when the value
of the horizontal line intersects the 60 EMA. The value of the
stop loss is adjusted to match the value of the 30 EMA and a
new line is projected to the right to define the duration of the
stop loss.

This combination creates the Trend Volatility Line or TVL. The charts shown are 1 minute charts. It is very important
Another way to say this is “amplitude plus duration equals to understand that the GMMA is built of fractal repetition.
trend volatility.” It is used to follow the developing trend. The Therefore, the TVL method can be very successfully applied
exit signal is delivered when the price closes below the trend across multiple timeframes.
volatility line. The exit is taken in the next candle period.

This indicator is used as a trend management tool. It is not TVL Trading Conclusion
used as an objective definition of the trend. Traders looking The TVL is a trade management method designed to reduce
for objective end of trend signals will be disappointed. Traders the incidence of false exits triggered by irrelevant changes
looking for effective methods to manage their trend exposure in in price volatility. It is applied to Intraday and End-of-Day
a trade will find this a very useful tool. trading. It is used in trading long and trading short. It is a
It is important to note that: solution to the increase in volatility seen in modern markets.
It is an effective trading solution for indexes, commodities,
• TVL does not define the start or end of the trend currencies and also ordinary stocks. The TVL is a trade
• TVL is not an objective trend definition tool management method applied by measuring trend volatility.
• TVL is a trade definition tool

7
 Included in GMMA 2.0:
The GMMA 2.0 Plug-in includes all the original
Guppy tools plus new Indicators, Systems, Stops,
and Strategies based on the techniques discussed
in Guppy’s articles.

Indicators
GMMA Indicator Plots the 12 Exponential Moving
Averages based on the methods of Daryl Guppy (see
chart, right).
GMMA Oscillator Plots the difference between the
sums of the two groups of Moving Averages. A signal
line is also generated, similar to MACD.
GAMS Oscillator Calculates the standard score of the
GMMA oscillator against historical values and plots
the values with scale lines for -2, -1, 0, 1, 2 standard
deviations.
GMMAD Indicator Plots the sums of the differences of
a group of EMAs. An increasing GMMAD indicates GMMA with the GAMS Oscillator: The GMMA shows changes in trend
an increasingly positive (bullish) trend. by illustrating the sentiment of investors (red) and traders (blue). Note
how well it identifies the changes in trend!
GA Separation Calculates the sum of the separation
of three EMAs—a valuable indicator to identify
trends and reversals.
Guppy CBL Indicator NEW The Guppy CBL
Indicator plots price levels based on Daryl Guppy’s
Count Back Line concept as discussed in his book
Trend Trading.

Systems & Stops

The GMMA 2.0 Systems and Stops were used
to construct the Strategies on pages 9-10.

GAMS System
GMMAB System
Guppy CBL System NEW
Guppy Fixed CBL Loss Stop NEW
Guppy Trailing CBL Stop NEW
Guppy TVL Stop NEW
GAMS Separation Oscillator: Calculates the standard deviation between
three Moving Averages. In this case, we used 3, 8, and 15 periods to
identify new trends as quickly as possible.

8
Strategies
GMMA Optimized
The GMMA Strategy was released in the first
version of the GMMA Plug-in, and it utilizes the
classic OmniTrader voting method between 35
different trading systems. Once a consensus signal
is found, various filters based on the GMMA
concept are used to qualify the signal as a good
trading candidate. This strategy uses optimization
in order to find good trading opportunities, and
it is widely regarded as one of Nirvana’s most
popular prospecting strategies.
TVL Trailing Stop
NEW! GMMA Reversal
The GMMA Reversal Strategy is a Long Only
strategy that uses tools from our original GMMA
Plug-in (GAMS and GA Separation), PLUS
Guppy’s new Trend Volatility Line (TVL) GMMA Reversal on AAPL.
Trailing Stop.

This strategy looks to enter the market during

pull-backs in a bullish trend. The GAMS system
fires the signals on the pull-backs, while the GA
Separation indicator is used as a filter to identify
the trend. Guppy’s new TVL stop helps to
maximize gains.

NEW! Guppy CBL Classic

On pages 4-5, Daryl Guppy describes the CBL
line and why it provides a universal trading
method as Entries and Exits can be based on the
CBL Line without regard for volatility.

The Guppy CBL Classic Strategy was created

according to Daryl Guppy’s teachings in his book
Trend Trading. This strategy uses a 3-bar Count
Back Line (CBL) to identify entries, the Guppy
Fixed CBL Stop to set the maximum loss on
positions, and the Guppy Trailing CBL Stop to
manage the winners—a classic version of Guppy’s
Guppy CBL on DIS. The CBL Trailing Stop follows price action according
CBL concepts!
to ranges of volatility providing a very optimal exit.

9
 BONUS! The Guppy Power Strategy
Never before released to the public, the Guppy
Power Strategy uses several tools from our new
GMMA 2.0 Plug-in. This Mechanical Strategy
uses the CBL to identify entries and maximum
risk. It also uses the TVL trailing stop to ride
winning trades.

We also used a Moving Average Crossover Breakeven Stop

Count indicator to find smooth moving stocks, used for 3% gain!
our Volatility Breakout system (VTY-B) to
confirm entries, and a special Breakeven Stop
that consistently pockets small winners, while
occasionally hitting homeruns.

The Breakeven Stop is based on the idea that price

should be able to move at least 1.5 ATRs in the
direction of a great signal. If price moves to this
TVL Stop manages
first target, the odds of pocketing a winning trade a 14% gain!
improve dramatically. If price blasts through the
first target, the TVL trailing stop takes over and
helps to bank a big winner.

CMI illustrates the two types of trades that you will

typically see from the Guppy Power Strategy—a
quick winner, and a big winner. The first Long
signal shows the strategy taking a relatively quiet
3% gain, while the second signal leads to a 14%
gain, which is managed by the TVL stop.

The chart for ADS shows the same great concept of

Breakeven trade management. The first trade shows Price blasts through first
price rallied through the first target, allowing the target, leaving TVL to
TVL stop to manage a 23% winner. The Breakeven capture a 23% gain!
stop was then used to pocket another 3% gain for
the second signal. This outstanding Guppy-based
Strategy is included with the GMMA 2.0 plug-in.

All Trades: Guppy Power Strategy Breakeven stop helps

Statistic Back Test pocket a 3% winner!
Number of Trades.........................................352
Profitable Trades...........................................218
Average Hit Rate (%)..................................61.93
Average Net Profit Per Symbol (%)...............3.52
Average Net Profit Per Trade (%)...................0.97
Average Bars Per Trade...................................15

This performance report was generated on the Guppy Power Strategy trades on CMI and ADS.
S&P 100 since January of 2008.

10
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GMMA 2.0