Microsoft Stock Trade - Risk Managed Win

Our stock selection process indicated the near term outlook for Microsoft was favourable, not least with monetising future updates on Windows 10, the worlds dominant computer operating system, but also with new AI revenue streams.

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

On 7th October price advanced strongly higher reaching 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 in anticipation of earnings beating results hitting 3rd target. Due to the strong move and price jump we closed out more of our position to book more profit, leaving just a small risk free amount open.

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

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