Tesla Volatility Trade Framework
The video in today’s post focuses on leveraging volatility bands to navigate Tesla’s (TSLA) often unpredictable market movements. Adrian provided detailed insights into managing Tesla’s opening volatility, crafting a personalized approach based on individual trading style and risk tolerance.
Key Concepts of Tesla Volatility Trade
The strategy begins with identifying Tesla’s opening range and pivot points. An “inline open,” where Tesla’s price opens within the previous day’s closing range, becomes a pivotal moment for initiating trades. If Tesla opens below the central pivot, the strategy involves watching for price movement toward resistance above the entry level, followed by a rollover through the entry price, signaling a short trade. Traders are cautioned to adapt stops just above the pivot to minimize risks.
Entry timing is critical, especially during volatile opening bars. For traders uncomfortable with first-bar volatility, patience is advised, waiting for more stable setups. For instance, the Tesla Volatility Trade recommends observing whether subsequent bars test and reject the pivot, confirming the trend before executing trades. A second entry opportunity often arises when Tesla’s price retests and fails at the pivot, enabling another short trade.
Target and Risk Management
Profit-taking and risk management are essential to the Tesla Volatility Trade strategy. Initial targets are set at support levels below the entry point. Trailing stops lock in profits while providing flexibility if Tesla’s price retraces. Adrian underscores avoiding trades on oversized bars that diminish the risk-reward ratio, instead focusing on setups with manageable targets within Tesla’s typical range during less volatile parts of the trading day.
Broader Application
This approach is structured for high volatility periods, particularly the first hour after the market opens. After the initial session, the focus shifts to re-evaluating Tesla and other stocks (the “Magnificent 7”) for potential afternoon setups. The Tesla Volatility Trade thus integrates a disciplined methodology to handle both morning and afternoon trading opportunities while adapting to Tesla’s unique price action.
Adrian concludes by encouraging traders to develop their rationale and apply these principles to achieve consistency with the Tesla Volatility Trade. This systematic method balances risk and reward, offering traders a robust strategy for effectively navigating Tesla’s dynamic market conditions.
Those are my notes on what Adrian covered in the video. Now, have a look and see what your takeaways are.
For a recap of today’s War Room trades, click here.
Good Trading,
Julie Manz
