Microsoft Stock Trade - Risk Managed Win

Our stock selection process indicated that the near term outlook for Microsoft was looking favourable, not least with the company recently monetising future updates for Windows 10, (the world's dominant computer operating system), but also with new AI revenue streams soon to hit the balance sheet.

After a recent price retracement, the market presented a favourable opportunity to get positioned before the next "anticipated price move". On 2nd October we positioned our orders to go long as price broke through a consolidation formed on the daily chart.

On 7th October price advanced strongly higher reaching our first target, and presenting an opportunity to close some of our position and reduce trade risk.

We held the remainder of our position open, and on 28th October (the day before earnings) price exploded higher with the anticipation of an earnings beat resulting in our position hitting 3rd target. Due to the strong price move and gap in the charts we closed out more of our position booking more profit, leaving just a small risk free amount open.

The following day, as expected Microsoft earnings beat expectations across the board. However, earnings related to AI revenue disappointed the markets and with price already technically stressed, it retraced over concerns of future AI valuations. Over the following day's stock prices receded further along with the general market risk tone, eventually moving through our stop orders closing out the last of our position.

This is a good example to demonstrate, that however good a trade looks, correct risk and money management is crucial to protecting capital and profiting from the markets.