What I want to talk about today is Tesla, because that’s quite a big deal. Tesla has been down 15% last week, and the question right now is, is Tesla a good buy?
Should you buy Tesla right now? Should you wait? When exactly is it a good time to get into this?
In order to determine this, I want to look at the technicals. This is where I’m jumping over to PowerX Optimizer, and now below you see Tesla.
As you know, the PowerX Strategy is based on three indicators: Stochastics, RSI and MACD.
We want to see that the Stochastics is above 50, the RSI is above 50, and that the MACD is above its moving average, then it is a buy.
As we are zooming in here on Tesla we can see that it has been a buy. This was a couple of weeks ago, at around $800. And you see that all three indicators were green all the way up until it topped more than $1,200.
Right now, the indicators no longer agree with each other saying Tesla could turn around. And this is where right now, as of Friday, November 12th, we are seeing a red bar.
A red bar means that now it is more likely for Tesla to keep moving down. So for me, right now would not be a good opportunity to buy Tesla.
What would have happened if you timed TSLA entries?
Let’s look back and see what would have happened if you had used the PowerX Strategy to time Tesla entries.
Here we see the P&L chart at the bottom, and we are looking at Tesla over the last two years. If we show the trades we see we see that we had a few entries.
With the PowerX Strategy we are not following a buy and hold strategy, and here’s why.
With a buy and hold strategy, of course, you’re making money when the stock is going up. But as you can see, Tesla at some point was trading at $900 and then for a long, long time, Tesla has been trading below $900.
What is the difference between trading and investing?
Now, during these times, there are still possibilities to enter short-term trades. That is the major difference between trading and investing.
With trading, you’re a little bit more active. So that’s where we see we had quite a few trades, not really a whole lot of movement because Tesla was just moving sideways.
The key here is that we are capturing and capitalizing on the larger trends. Now, we never wait until we hit really high because it’s super difficult to time exiting at the high. The only person who seemed to have nailed it was Elon Musk, LOL.
Talk about a little bit of insider trading, and this is what happened recently. Elon Musk sold 6.9 billion dollars of Tesla shares, and this is why Tesla went down by 15%.
Is now a good time to enter TSLA?
I would say, no, not yet, because we want to see that the three indicators are indicating that we have another good buy opportunity.
We want to see that the Stochastics is moving above 50 again, that the RSI is moving above 50, and the MACD is moving above its moving average.
Right now it seems that it is more likely for Tesla to go down or to keep going sideways, and this is not a good time to enter.
There are so many traders who entered at the high when Tesla was trading at $1,000, $1,100 or $1,200.
You want to make sure that you time the entries. This is why I believe it is so important to really have a great trading strategy.
What is a good trading strategy?
A trading strategy tells you:
Number one, what to trade, and let’s say that you’re dead set on trading Tesla.
Number two, the trading strategy tells you exactly when to enter, and this is what we have with the PowerX Strategy, we have clear-cut rules.
By the way, if you would like to learn more about the PowerX Strategy you can check out a playlist with videos that go into more detail about this strategy and the rules HERE.
And then number three is, a good trading strategy tells you when to exit. Our exits, with PowerX Optimizer, are not really at the high, but they’re taking you out with some really nice profits.
Losses are a part of our business as traders
The trading reports show you what would have happened if you had traded it with a $10,000 account.
You would have had around $1,000, another $1,000, then a small loss of $26. No big deal, right? Then you’d have had a $112 loss, a $148 win, $1,100 win, $161 win and a couple of losses.
You see, losses are part of our business as a trader. The key is that the wins that you have here, a few are smaller, but some of them are the bigger wins and this is what you are looking for.
A stock like Tesla, you would trade with aggressive exits. And again, this is where the PowerX Optimizer tells you exactly what would be the best exit strategy.
Everybody can enter the market. They say a monkey can buy Tesla, that is true, right? It’s just so easy hitting buy, or on the phone you just swipe right. But the key is when to exit Tesla.
If we look at the various exit strategies, we see that every stock is different.
For Tesla, we see that by far the aggressive is sticking out and giving you the biggest profit, the biggest ROI, with a winning percentage of only 50%. But it doesn’t matter because you’re making more money on your winning trades than on the losing trades.
When you are trading with technical indicators, the hype around Tesla and other companies doesn’t matter, right? This is where these fundamental evaluations seem to be out of the way.
I believe with the technicals everything is already factored into the prices. This is why, for me, it’s easier to trade with technical analysis than with fundamental analysis.
The other trading strategy I like to use is The Wheel Strategy, but with Tesla this would be fairly expensive.
If you want to sell a put at the $900 mark, this means that you need to have $90,000 in your account for every option that you sell. You could only trade one option, therefore, here it’s better to use the PowerX Strategy.
Is Tesla a buy? Not right now. I first want to see that the indicators are turning around again so that I see green bars on the chart.
I hope that you found this helpful, and If you would like to know how Mark and I personally trade these crazy markets, here are 2 videos for you:
One of them is explaining the “PowerX Strategy.“
The other one is explaining “The Wheel Strategy” in detail.