{"id":51698,"date":"2022-12-26T11:43:06","date_gmt":"2022-12-26T16:43:06","guid":{"rendered":"https:\/\/www.smbtraining.com\/blog\/?p=51698"},"modified":"2022-12-26T11:43:06","modified_gmt":"2022-12-26T16:43:06","slug":"learning-from-the-rip-in-tesla","status":"publish","type":"post","link":"https:\/\/www.smbtraining.com\/blog\/learning-from-the-rip-in-tesla","title":{"rendered":"Learning from the rip in Tesla"},"content":{"rendered":"

\"\"<\/p>\n

This week we wrote about how we were hawking a Tesla Bounce Trade.\u00a0 See Four keys for a Tesla Bounce Trade<\/a>.<\/p>\n

Friday we took that trade.\u00a0 And we took a rip.\u00a0 See\u00a0Taking a Rip in Tesla<\/a>.<\/p>\n

This weekend we challenged our traders to consider why the trade failed.\u00a0 See Why did we take a rip in Tesla<\/a>?<\/p>\n

Look the rip sucked. But over the weekend traders and I have been discussing why we took a rip in Tesla.\u00a0 What did we miss?\u00a0 How can we learn from this rip?\u00a0 How can we improve our trading systems?<\/p>\n

Here is some of our learning…<\/p>\n

One of our promising developing traders learned to wait for the confirmation first.\u00a0 He took the imitative to reach out to the Senior Trader on his team for feedback on the trade.\u00a0 In his words, he learned:<\/p>\n

After talking with Shark, I realized I could\u2019ve 100% done better by waiting for more price confirmation rather than fading the move into VWAP. Even though I did see confirmation from volume and the tape, I did not have full confirmation from PA yet. (edited) <\/span>These small but essential nuances are what make or break traders in this market. While it may of been something that you could\u2019ve gotten away with in 2020-2021, it just does not work like that in this market.<\/span><\/p><\/blockquote>\n

This is an important lesson from Shark to learn.<\/p>\n

Jeff Holden, who helps with our trader development at the firm, shared a savvy lesson with developing traders at the firm.\u00a0 It is important to watch how Tesla is trading relative to QQQ in the bounce.\u00a0 TSLA was weaker than QQQ in the bounce and thus was a signal of weakness.\u00a0 In his words,<\/p>\n

\n
One thing I thought was interesting was that an over extension trade showed up and triggered with the 2 min bar entry in QQQ as well and actually followed through where TSLA didn\u2019t follow through even though it was relatively strong at that time to other high beta tech.<\/div>\n
<\/div>\n
Super odd to see that.<\/div>\n<\/blockquote>\n

This was another lesson for us to learn.<\/span><\/p>\n

A member of our new Team Good2Gr8! at SMB<\/a> shared another important lesson from this rip.\u00a0 This trader found a signal from Tape Reading that was very clearly different and showed a very clear signal of weakness.\u00a0 We had a trade decision to make on our longs with this signal.\u00a0 This trader shared the exact moment of this that he recorded from the trading session and shared it with his team.\u00a0 This trader pointed out in detail the specific signal from Tape Reading that were very clearly different and very clearly showing weakness.\u00a0 In the words of this trader:<\/p>\n

a couple nuances that I noticed real time offered a great risk reward short – more importantly this short could have been used as a way to take heavy profits off the long without taking away the potential of letting the long run. It’s so clean it really haunts me and I haven’t been able to stop thinking about it.<\/p><\/blockquote>\n

We learned that we had a trade decision signal from our Tape Reading skills that we could have used to improve our results.<\/p>\n

(Scalping Was Hard, Until He Discovered This Little Trick<\/a>)<\/p>\n

Further, a systematic trader exchanged GChats with me on his TSLA Bounce Trade.\u00a0 His testing found a real edge in the bounce trade that he took.\u00a0 Given the failure of the trade he wanted to investigate further why the trade did not work.\u00a0 This gave me an opportunity to give him something to consider.\u00a0 In my words,<\/p>\n

\"\"<\/p>\n

This gives this trader an opportunity to refine his Bounce Trade (or Fade Trade) system for the present market.\u00a0 Perhaps we learned that in a bear market we need to see more evidence of a bounce before we take a Bounce Trade.<\/p>\n

These are some lessons we learned from the Tesla rip.\u00a0 We will continue to review and discuss other lessons.<\/p>\n

It is okay to took a rip in Tesla…if you learn from it.<\/p>\n

Bella<\/p>\n

Important disclosures<\/a><\/strong><\/p>\n

Mike Bellafiore is the Co-Founder of SMB Capital, a proprietary trading desk, and SMB Training, which provides\u00a0trading education<\/a>\u00a0in stocks, options, and futures. Bella is the author of\u00a0One Good Trade<\/em>\u00a0and\u00a0The PlayBook<\/em>. He welcomes your trading questions at\u00a0mbellafiore@smbcap.com.<\/p>\n

 <\/p>\n

 <\/p>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

This week we wrote about how we were hawking a Tesla Bounce Trade.\u00a0 See Four keys for a Tesla Bounce Trade. Friday we took that trade.\u00a0 And we took a rip.\u00a0 See\u00a0Taking a Rip in Tesla. This weekend we challenged our traders to consider why the trade failed.\u00a0 See Why did we take a rip in Tesla? Look the rip … Read More<\/a><\/p>\n","protected":false},"author":144,"featured_media":51700,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5463],"tags":[30,341,4426,4685],"class_list":["post-51698","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-bella-daily-update","tag-prop-trading","tag-tape-reading","tag-tesla","tag-trading-lesson"],"yoast_head":"\nLearning from the rip in Tesla | SMB Training<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.smbtraining.com\/blog\/learning-from-the-rip-in-tesla\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Learning from the rip in Tesla | SMB Training\" \/>\n<meta property=\"og:description\" content=\"This week we wrote about how we were hawking a Tesla Bounce Trade.\u00a0 See Four keys for a Tesla Bounce Trade. 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