Maximum Acceptable Loss

Check every trade to ensure that it is within your maximum acceptable loss.

Reconcile your trading style to the maximum % loss that you are prepared to take on a trade. 
Otherwise you will seldom find trades that fit your criteria.




Trading Diary
August 22, 2002

These extracts from my daily trading diary are intended to illustrate the techniques used in short-term trading and should not be interpreted as investment advice. Full terms and conditions can be found at Terms of Use .






USA
The Dow broke through resistance at 9000 to close up 1% at 9053 on lower volume. The primary cycle is in a down-trend.

The Nasdaq Composite climbed 1% to close at 1422. The primary cycle is in a down-trend.

The broader S&P 500 gained the most, rising 1.4% to close at 962. The primary cycle is in a down-trend.

The Chartcraft NYSE Bullish % Indicator  bull alert signal is at 42% (August 21).


Microsoft
An analyst upgrade of Microsoft helped the Dow rally above 9000 in the last hour of trading. (more)




ASX Australia
The All Ordinaries held on to early gains, closing up 29 points at 3143 on stronger volume.
The primary cycle trends down.
The Stochastic (20,3,3) and MACD (26,12,9) are above their signal lines, although the Stochastic is threatening to cross. Twiggs money flow signals accumulation.




AMP Limited [AMP]
AMP has shelved a $ 400 million share buy-back and will raise $ 750 million of new equity, to rescue it's capital base. (more)
AMP is in a stage 4 decline with falling relative strength (price ratio: xao) and weak MACD. Twiggs money flow shows a bullish divergence.



Resmed Inc [RMD]
 RMD has formed a stage 1 base. The 150-day moving average is leveling out and relative strength (price ratio: xao) is below zero but rising. Twiggs money flow shows a bullish divergence.



MACD also has a bullish divergence.






Conclusion

Short-term: Long if stops can be placed close to the entry point. Slow Stochastic and MACD are above their respective signal lines.
Medium-term: Wait for the All Ords to signal a reversal.
Long-term: Wait for a bull-trend on the Nasdaq or S&P 500 (primary cycle).

Colin Twiggs

Thought for the Day:

 Experience teaches you to recognize a mistake
when you have made it again.

- Unknown






Back Issues
Click here to access the Trading Diary Archives.






Back Issues
Access the Trading Diary Archives.


Colin Twiggs

Author: Colin Twiggs is a former investment banker with almost 40 years of experience in financial markets. He co-founded Incredible Charts and writes the popular Trading Diary and Patient Investor newsletters.

Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.

Focusing on interest rates and financial market liquidity as primary drivers of the economic cycle, he warned of the 2008/2009 and 2020 bear markets well ahead of actual events.

He founded PVT Capital (AFSL No. 546090) in May 2023, which offers investment strategy and advice to wholesale clients.