Update: I’m working on a book about stock trading with Robinhood app. Sign up here to hear updates about it if you’re interested.
This blog post is going to be the start of a series of posts about my stock trading experience that I had been planning to publish for a while. The goal is to share my buy and sell decisions (with as much transparency as I can) to document them, have a public record for accountability, and be able to review and analyze my buy and sell decisions. Also, as a benefit of this sharing, I hope other people will learn from my experience and also share their thoughts and experiences with stock trading so that I and others can learn as well.
(NOTE: This specific post is going to be backdated a little, but I will try to write and publish future posts in a more timely manner.)
Without further ado, let’s begin.
Buy on OKTA as of 4/4/2018
I am bullish on Okta (OKTA) as of 4/4/2018. I purchased twenty-six shares at $39.21 per share on 4/4/2018.
Company Background
Okta, Inc., founded in 2009, is a SaaS company based in San Francisco that provides single sign-on and other authentication services. They have a lot of enterprise customers, and I used their products when I worked at ThoughtWorks.
Recent Stock Performance
Okta is a recent IPO company (they went public in 2017), and since April 2017 it has shown 68 percent growth. They have yet to show a profit, but there has been continuous growth in earnings per share quarter after quarter. At the time of my purchase, the stock price showed a steady uptrend after a correction.
Entry
After looking at the latest stock price and trading volume at the time, it seemed that the stock was getting out of a “cup” pattern, and it was time to give it a shot and buy it.
But since the stock market is never a sure thing, I have my exit strategy for the best case and worst case scenario.
Successful Exit Strategy (Best Case Scenario)
My plan for the best case scenario is to have an exit price at which I’ll feel comfortable selling the stock I bought and exiting the position. So far this has been the hardest thing for me to figure out. I’m still learning how to analyze the stock market to see when the demand for a stock starts to wind down. When demand winds down, it leads to a slow down in price increase, which means that I’m better off selling the stock. Today my strategy is to sell at the 20–25 percent increase mark if it takes the stock eight or more weeks to get there, or keep it and see what happens if the stock shoots through the roof in the first four weeks after I buy it.
Typically I end up automatically shorting the position at 15–20 percent gain based on stop limit safety rules I have in place, which follow.
Failure Exit Strategy (Worst Case Scenario)
After reading How To Make Money In Stocks by William O’Neil, I adopted his approach to cutting losing stocks short earlier, specifically at the 7–8 percent mark. So far this strategy worked very well for me in the currently bullish market. So with this position I would apply the same rule: I have a stop-limit sell order for my entire OKTA position at $36.10 with a limit price of $36.07
This stop-limit sell rule means that if the stock price drops to $36.10, then my conditional order will become a sell limit order at $36.07 and will be fulfilled at that price (this is of course is not guaranteed).
The Wrap Up
Here we go. Now I am the proud owner of twenty-six shares of Okta. I’ll monitor the stock performance over the coming weeks and will publish a follow-up post when I finally sell my position.
I hope you found this interesting. Please feel free to share your thoughts on my purchase in the comments below or via email. I’d love to hear what you think and what you are trading with these days.
Happy trading!
Update: I’m working on a book about stock trading with Robinhood app. Sign up here to hear updates about it if you’re interested.
P.S.: Before anyone starts to nag me about this — yes, I realize that a stop-limit order is not a guarantee and there is a chance that my sell-limit order will not be fulfilled if the stock price drops too rapidly. So far it has not been an issue for me because the amount of stock I’m trading with is so minuscule that it is almost always fulfilled. There are other ways to work around this such as using a stop-loss order, which I might employ in the future if fulfillment becomes a problem.
Also, a quick note on the stop limit I have: I constantly keep bumping it up as the stock price goes up (I don’t move it down when the stock price drops) so I can automatically get out of my position if the stock stops growing. There is no point in keeping my money in the losing stock; I’m better off reinvesting in some other stock that’s growing right now.
P.P.S.: I use Robinhood as my trading platform of choice. If you’d like to sign up use this link — both of us will get a chance to win some stock for free. If you’d like learn more about how to start stock trading read my previous article about it.
