Here is my trading report for Tesla stock! Bought low and sold on uptrend…
Tesla stock has been very volatile and not a good play for long term investors at least for this year. As a reference, Tesla is close to -30% YTD.
On the other hand, so much swinging opens the door for some short term gains.
And here’s how I looked at it…
As we can see from the graph, the previous support was around the $230 level. It bounced, hit the 20 SMA level and dropped.
Under $200 some consolidation was happening and the stock dropped to a new low on the 3rd of June of $177.01 and it closed that same day with high volume at $179.
So 5 things made take the position:
- The downtrend from $200 level was losing volume.
- Price was touching the trend line.
- The 3rd of June after a new low ended on high volume.
- RSI indicator was practically in oversold territory.
- The 1-hour chart was showing bullish divergence on the RSI and MACD.
Then I opened a position at $180.98 on the next day!
I continued to use the 1-hour chart as a reference to prepare my exit point while having in mind the previous support of $230. I was also keeping an eye on the news to check for possible catalysts while increasing my stop loss to at least guarantee some profit.
The catalyst came on the 3rd of July with the deliveries report for Q2.
Since it’s IPO on May 2, the stock had quite a run from $25 a share. I had open a position on the stock yesterday at $68.81 with 20 shares, conscient of the risk of betting on recent IPO’s (just look to Lyft).
The stock pushed-up to the $240 level but it was not strong enough to keep the uptrend.
So I ended-up locking-in profits and here is my profit:
ROI = ($238 — $180.98) / $180.98 x 100= 31.51%
Profit excludes commissions and taxes.
Is trading wrong?
In my opninion no. The stock market is by nature the reflection of a price consensus at any given time. As time moves, the consensus changes between undervalued, fairly priced and overvalued.
Taking profits from the market inefficiencies for me is a alternative way to grow my assets and therefore taking me one step closer to financial independence.
Many people in the stock market claim they are either a long term investor or a speculator. In this case, I am both since my stock portfolio has a focus on long term positions with some occasional trading or simply profit taking. I also hedge my portfolio by shorting my own positions. Does this make me a speculator?
Well at the end, all of us are speculators. No one really knows about the future of the stock market. Yes, history shows that it goes up in the long term but that is based on past data. The next 80 or 90 years will always be a surprise.
So in essence, we are all betting the market will go up as whole. Therefore, we are all speculators independently of our investment strategy.
The profits from my trades, are kept in my investment accounts and I do not use them as a income source. If you are curious about how I allocate my money, you can read more about my 5 basket total portfolio here.