Four keys for a Tesla Bounce Trade

Many trading eyes are waiting for a $TSLA bounce.  Let me share four keys (not all of them) to trade this opportunity well as an active trader.

Sensing too many traders were positioning for a bounce *too early*, I shared this tweet with the trading community:

My goal was to remind traders they needed to be specific about the Bounce Trade they would take.  That this trade should be a part of their PlayBook.  That they would wait to SEE the Bounce Trade before entering.  That they would not FOMO into the trade too early, without SEEING the Bounce Trade yet.

The first key is to identify *specifically* what you want to SEE to pull the trigger on a Bounce Trade.  Some traders call this game planning the scenarios you will get long.  Again, the tweet above was meant to get traders to start game planning for the specific scenarios worth playing for a Bounce Trade in $TSLA.

(The Emotional Overextension Bounce Traded Profitably)

Steve Spencer shared a possible Breaking News catalyst with the trading community (see below) and I encouraged traders to give this some consideration.  Not that this is the only way to get long.  Not that this will happen.  But rather that traders should be thinking of specific news catalyst that could cause TSLA to bounce.

The first key is to be *specific* about the variables necessary for you to take the Bounce Trade.

The second key is to *SEE IT*.  SEE the variables in TSLA before entering the trade.

When you SEE these variables in TSLA and take the trade this does not mean the trade will work.  Remember trading is a game of probabilities.  As long as you have edge in the trade, then you have made One Good Trade.  And that is your job as a trader.

So in that spirit, we reveal the third key to making a Bounce Trade in $TSLA.  Trade with a stop.  Determine where you are wrong on the trade and the risk you are willing to take.  See below…

Finally, I consistently Gchat to SMB traders with potential opportunities like the $TSLA Bounce Trade to…have fun!  This is an unusual opportunity.  This could be a huge trade if you catch it and structure it well.  It is one of the potentially big trades of the month.  There is nothing to stress out about.  If it doesn’t work, you will still be a better trader for experiencing it.  The risk/reward can be outsized.  These are the opportunities for which we train and study.  As long as you are prepared and trade within your risk guardrails, then…have fun.

That fourth key is..have fun.

Summary:

  1. Be specific
  2. SEE IT
  3. Set a stop
  4. Have fun!

Bella

Important disclosures

Mike Bellafiore is the Co-Founder of SMB Capital, a proprietary trading desk, and SMB Training, which provides trading education in stocks, options, and futures. Bella is the author of One Good Trade and The PlayBook. He welcomes your trading questions at [email protected]