Alright, with my first order under my belt I’m prepared to make my next purchase. I continued to watch hourly Thursday and Friday. There were similar fluctuations going up to $45. Which was good news for my 50 stocks but I was still interested in buying 50 more. Then on Monday, August 27 it dropped to $43.00. Still not my goal but the lowest I’d seen it in a few weeks. Since the price had changed and each share was costing me more I wasn’t able to buy as many as I originally planned. So this time I purchased 20 shares @ 43.00 plus $7 = $867. This second purchase I bought as a limit order. I was only aware to do this because I had gone back and reread an article on the Simple Dollar on a book review of Jim Cramer’s Mad Money. (This is a great article, by the way, and very informative. I recommend you take a moment to read it in its entirety.) I didn’t really understand it fully when I read it the first time but now that I was actually going through the process I realized I had read something about limit orders.

On Scottrade, when you go to buy a stock there are 3 fields, ticker symbol, number of shares, and an order type drop down box with various options which include market, limit, stop limit, stop and trailing stop. When I made my first purchase, I didn’t know the difference so I just went with the default which was market. That meant that I was buying at whatever price was currently showing on the market. With a limit order, you are basically placing a bid. Once the stock price matches your bid price it automatically buys it for you. So on Monday I placed a $43 limit order on 20 stocks in the morning. Later that afternoon, I received an email confirmation that my order had been placed. This order type eliminates having to monitor every second and frantically trying to buy before the price goes up again.

I also read on that same Jim Cramer review that he recommends investing no more than 20% of your portfolio in any one stock. So after reworking the math, I decided to lower my original investment amount from $4,000 to $3,000. I certainly didn’t want to have too many eggs in one basket for my first ever stock purchase. Technically, 20% of my portfolio would be $2800 so I’m even still being a little risky with it.

Now at the end of day, my total investment is $3,041 in 70 shares of Coach.