Welcome to my deep dive into a successful trade with CrowdStrike Holdings, Inc. (CRWD), a leader in cloud-delivered endpoint protection. This blog post will walk you through the trade from its inception to its profitable conclusion, sharing key insights and strategies along the way.
Initial Trade Setup
Identifying the Opportunity
On January 8, 2024, CRWD caught our attention. The stock was trading at $260.90, and it was positioned to break above the Exponential Moving Average (EMA) of 21 days, backed by heavy trading volume. This bullish signal served as our catalyst to initiate a trade.
Defining the Risk Parameters
With every trade, managing risk is paramount. We set our stop loss at $245.25, capping our potential loss at a maximum of 7%. Our profit target stood ambitious at $313.08, offering us an attractive reward-to-risk ratio.
Trade Execution
Opening the Position
I took a calculated risk by allocating 12.15% of my portfolio to CRWD, even though the stock wasn’t in its ideal buy range. My decision was based on the strong market outlook and the stock’s 97 Relative Strength (RS) rating, signaling significant momentum.
Trade Rationale
I decided to open the trade based on clear technical signals: CRWD’s price had just surged above its EMA-21 on significant volume, indicating that the stock was accumulating, and I expected the upward price momentum to continue.
Monitoring the Trade
Market Conditions
I maintained a vigilant eye on the market conditions, which remained in a confirmed uptrend. This environment supported the decision to hold the position.
Adjusting the Strategy
Despite the stock not being in the ideal buy zone initially, I remained confident due to the strong market outlook and the stock’s rising RS rating, which eventually hit 98.
Closing the Trade
Capitalizing on Strength
On February 8, 2024, I closed the position at $322.29, as CRWD reached the profit target. The position was sold into strength, embodying the principle of “leaving the party while it’s still fun,” locking in a substantial return.
Post-Trade Analysis
Reflections on Performance
This trade exemplified the efficacy of the strategy, yielding a 22.68% return on investment (ROI) for the position, enhancing the portfolio by 2.76%.
Improvements and Lessons Learned
There was the potential for improvement. The optimal entry point was missed on August 31, 2023, when the stock was at $163. Future trades should capitalize on such opportunities:
Takeaway Strategies
The successful outcome reinforced several key trading strategies:
- Utilize Technical Indicators: Channel lines proved to be reliable for timing both entry and exit points.
- Industry Leadership Matters: Investing in leading industry stocks tends to yield better results due to their upward price trajectory.
- Focus on the Long Haul: A well-managed, long-term trade can offset several smaller losses.
trade details
opening
- Date Opened: 8 Jan 2024
- Underlying Price: $260.90
- Stop Loss: $245.25
- Profit Target: $313.08
- Market Outlook: Confirmed uptrend
- RS Rating: 97
- Position Risk, %: 5.98%
- Position Risk to NL, %: 0.73%
- Position Size, %: 12.15%
- Why Trade Opened: The price broke above EMA-21 with heavy volume.
closing
- Date Closed: 8 Feb 2024
- Price at Close: $322.29
- Market Outlook at Close: Confirmed uptrend
- RS Rating at Close: 98
- RS Change: 1
- Position ROI, %: 22.68%
- Position ROI (Portfolio), %: 2.76%
- Position Open Time (Trading Days): 22 days
- Position Open Time (Days): 31 days
Conclusion
The CRWD trade was a testament to the power of strategic planning, risk management, and decisive action in the market. By sharing this case study, we hope to inspire and educate traders on making informed decisions that align with market conditions and personal risk profiles.
Remember, a single well-executed trade can significantly impact your portfolio’s performance. So, keep learning, stay disciplined, and trade smart!
