How To Day Trade Tesla Stock

Category: Trading Guides | Author: Trading Brokers | Date: May 5, 2024

When it comes to day trading Tesla stock, there’s a world of opportunity for those who are skilled and well-prepared. If you’re intrigued by the idea of actively buying and selling Tesla shares within a single trading day to take advantage of short-term price fluctuations, you’re in the right place. Whether you’re a seasoned trader looking to explore a new stock or a beginner eager to learn the ropes, this guide aims to provide you with actionable insights and practical tips to help you make informed decisions while day trading Tesla stock. In this article, we’ll delve into the world of day trading and explore the specific steps you can take to successfully navigate the ups and downs of trading Tesla shares within a single trading day. So, let’s dive in and discover the exciting world of day trading Tesla!

What Does It Mean To Day Trade Tesla Stock?

Day trading Tesla stock refers to the practice of buying and selling Tesla shares within a single trading day to capitalize on short-term price fluctuations. Day traders aim to profit from intraday volatility by entering and exiting trades quickly, often multiple times throughout the day. They rely on technical analysis, chart patterns, and indicators to identify potential trade opportunities. Day traders typically do not hold positions overnight, as they seek to take advantage of price movements occurring within a single trading session.

For example, let’s say a day trader observes that Tesla’s stock price has been consolidating within a narrow range for the past hour. They notice a breakout pattern forming and decide to enter a long position (buy) if the stock price breaks above a certain resistance level. As soon as the breakout occurs, the trader executes a market order to buy Tesla shares. They set a profit target and a stop-loss order to manage risk. Once the stock reaches the profit target or the stop-loss level, the trader exits the trade, regardless of whether it is a winning or losing trade. The entire process takes place within a single trading session, and the trader looks for similar opportunities throughout the day to maximize their profits.

Steps Taken To Day Trade Tesla Stock

Day trading Tesla stock involves actively buying and selling Tesla shares within a single trading day to take advantage of short-term price movements. It is important to note that day trading can be highly risky and requires careful consideration and expertise. Below are the steps involved in day trading Tesla stock:

Step 1: Learn And Understand Day Trading

Before diving into day trading Tesla stock, it’s essential to have a solid grasp of the principles and techniques involved. Study books, online resources, and educational materials that cover topics like technical analysis, chart patterns, risk management, and trading strategies. Familiarize yourself with key concepts such as support and resistance levels, moving averages, candlestick patterns, and volume analysis. Consider enrolling in trading courses or attending webinars to gain further insights and practical knowledge from experienced traders. Practice analyzing historical stock data and identifying trade setups to enhance your skills and decision-making abilities.

Step 2: Set Up A Trading Account

Choose an online brokerage that offers a user-friendly platform, low commissions, reliable execution, and access to real-time market data. Research different brokers to find one that suits your trading style and preferences. You can see our best stock brokers for some inspiration. Open an account, provide the required documents, and fund your trading account with sufficient capital. Ensure the trading platform provides features like customizable charts, technical indicators, real-time quotes, and order execution capabilities. Take time to explore and become comfortable with the platform’s functionalities, including placing orders, setting stop-loss levels, and monitoring your portfolio’s performance.

Step 3: Conduct Thorough Research

Stay informed about Tesla’s recent developments, news releases, and earnings reports. Follow reputable financial news sources, analyst reports, and Tesla’s investor relations website for accurate and timely information. Analyze Tesla’s financial statements, quarterly reports, and annual filings to understand the company’s financial health, revenue growth, profitability, and future prospects. Monitor industry trends, regulatory changes, and any potential catalysts that could impact Tesla’s stock price. Keep an eye on competitor activities and market sentiment towards electric vehicle stocks as they may influence Tesla’s performance.

Step 4: Develop A Trading Plan

A well-defined trading plan is crucial for day trading success. Clearly outline your trading goals, risk tolerance, preferred timeframes, and trading strategies. Specify your entry and exit criteria based on technical analysis, and determine your position sizing and maximum acceptable loss per trade. Establish profit targets and trailing stop levels to secure profits. Incorporate risk management techniques such as setting stop-loss orders to limit potential losses and diversifying your trades across different stocks to minimize risk. Regularly review and adjust your trading plan based on your evolving experience and market conditions.

Step 5: Use Technical Analysis

Technical analysis helps identify potential entry and exit points based on historical price and volume patterns. Study various technical indicators such as moving averages, oscillators (e.g., RSI and stochastic), and momentum indicators to assess price trends, overbought or oversold conditions, and potential reversals. Learn to interpret chart patterns like support and resistance levels, trend lines, triangles, and breakouts. Combine multiple indicators and chart patterns to increase the reliability of your trading signals. Continuously refine your technical analysis skills through practice and by observing how Tesla’s stock reacts to different market conditions and events.

Step 6: Monitor Pre-Market Activity

Before the market opens, closely monitor Tesla’s pre-market trading activity. Pre-market trading provides valuable insights into market sentiment and potential price gaps before the official market open. Track Tesla’s pre-market trading activity to gauge the stock’s strength or weakness, identify any significant news releases, or evaluate the impact of overnight events. Monitor the pre-market trading volume and observe how the stock behaves relative to important technical levels. While pre-market trading has limited liquidity and can be more volatile, it can offer early indications of how Tesla’s stock may perform when the market opens. Take note of any relevant news or market developments during this period.

Step 7: Set Up Trading Alerts

Set up trading alerts on your platform to receive notifications when Tesla’s stock reaches specific price levels or when technical conditions are met. These alerts can help you stay informed of potential trade setups without constantly monitoring the market. Utilize the trading platform’s alert features to stay updated on Tesla’s stock price movements and technical conditions. Set price alerts for specific levels where you plan to enter or exit positions. Additionally, configure alerts based on technical indicators or chart patterns to notify you when specific conditions are met. Customize the alert settings to suit your preferences, such as receiving notifications via email, text message, or pop-up alerts within the trading platform.

Step 8: Execute Trades

Once the market opens, actively monitor Tesla’s stock price and volume. When executing trades, choose between market orders and limit orders based on the prevailing market conditions. Market orders execute immediately at the best available price, while limit orders allow you to specify a specific price at which you want to buy or sell Tesla shares. Consider using limit orders during times of high volatility to have more control over the price at which your order is executed. Monitor the bid-ask spread, order book depth, and overall market liquidity to ensure your orders can be filled efficiently without significant slippage. Act promptly when trade opportunities arise, but always stick to your predetermined trading plan. Monitor the trade closely after execution to make timely adjustments if needed.

Step 9: Implement Risk Management Strategies

Proper risk management is crucial to protect your trading capital. Set stop-loss orders to automatically sell your Tesla shares if the price falls below a predetermined level. Determine a reasonable stop-loss level based on your risk tolerance and technical analysis, ensuring it is placed at a point that indicates a potential invalidation of your trade setup. Implement trailing stop orders to secure profits as the stock price moves in your favor, allowing you to capture additional gains while protecting against potential reversals. Regularly reassess and adjust your risk management strategies based on market conditions and the specific trade setup.

Step 10: Continuously Evaluate And Adjust

Successful day trading requires continuous learning, self-evaluation, and adaptation. Keep a trading journal to record your trades, including entry and exit points, reasons for taking each trade, and post-trade analysis. Review your journal regularly to identify patterns, strengths, and weaknesses in your trading approach. Analyze your trading performance and assess the effectiveness of your strategies. Identify areas for improvement and consider making adjustments to your trading plan, risk management techniques, or trading strategies based on your observations and feedback from the market. Emphasize consistency and discipline in your approach to achieve long-term success in day trading Tesla stock.


In conclusion, day trading Tesla stock can be a thrilling and potentially profitable endeavor. By following the steps outlined in this guide, you can develop a solid foundation for your day trading journey. Remember to continuously educate yourself, adapt your strategies, and practice disciplined risk management. While day trading comes with risks, it also offers the potential for rewarding returns. So, seize the opportunity, embrace the excitement, and embark on your journey to day trade Tesla stock with confidence.

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