Here’s how you trade Tesla ($TSLA). (August 02, 2021)
TSLA
I want to look at Tesla ( NASDAQ: TSLA ) today. This is a stock that has been on our Active Trade List for a while. Meaning, we just got in last week on this little pullback here.
What I like to do, by the way, is, I will look at a stock like this, some traders were good to buy the stock last June, still be holding it, and feel like, hey, 263 percent, that’s good for me. And that’s great, but they are also then, willing to sit through a 33 percent drawdown. And then from up here another 36 percent drawdown. They are willing to sit through what is still a basing process for over a year. Where they are now, they could have done even better if they had sold in the first part of this year.
So what’s my point? My point is, there are any number of ways to trade a certain stock and all of them can be very different but all of them can still be very profitable. The difference is in you, it’s in what each trader feels is their best way of trading. And you will kind of gravitate towards it. You are going to find out, even when you adopt a process that works for you, you are still going to find out what kind of a trader you are. If you tend to like to hold things for a longer period of time or whether you are just kind of quick flipping. And the right system is the system that makes you money.
We just took a shorter-term trade here. I can’t ride stuff like this down, I just can’t. I won’t, I’ve never been able to, I never want to be able to. But when I see a stock like this, a strong stock, it’s in demand, it’s Tesla ( NASDAQ: TSLA ). And the stock was right at the 50 and the 200-day moving average. That is a very, very powerful setup here. When you’ve got a stock right in here, that’s a powerful setup. Then you look at the weekly chart and you can see this stock could run really, really nicely, so we are still in it.
My suggestion is, decide how you want to trade it. I don’t think you can buy it here, I certainly wouldn’t. But I wouldn’t sell it here either unless you are an action junkie. If you are a short-term trader then you actually would have wanted to be out sometime earlier today. But I think the best bet, for the short-term guys, is, look at the Volume Weighted Average Price. Typically a stock, towards the end of the day, will drift back to the Volume Weighted Average Price, whether it’s from below upwards or from above downwards, just because the price will ultimately just kind of sink to whatever the average price was for that day, the volume on any given price range. As long as a stock is staying above the VWAP then long is the place to be.
Again, I am talking short-term traders. But if the price starts to fall below the VWAP, then you really want to start looking at that stock and decide whether you want to still be in that stock. By the way, in another big deal, I don’t really mention this too much. I think I just kind of think about it without thinking about it, what’s the direction of the VWAP? What’s the direction of the Volume Weighted Average Price? If we just look at the VWAP, I already have it as thick as I can have it, if we just look at the direction of the VWAP, this is not where you want to be long. This is not where you want to be long. This is not where you want to be long. Here, this is where you want to be long. You see there is a difference, if you just look at the orange line there with nothing else, you could actually position trade this stock.
Free Chart