Why It’s Almost Never a Good Idea to Short Tesla in the Hole

 
   
     
Why It’s Almost Never a Good Idea to Short Tesla in the Hole
 
 
Hey traders!

We finally saw some bullish action in Tesla to start the week with the stock bouncing 6.5% and nearly $11 a share on Monday. 

That was enough to push it back up to -30% year to date… 

Things have obviously been rough for my baby this year, but I wanted to talk about something I mentioned on Telegram on Monday about why we didn’t take a short trade last week…

With shares of Tesla (TSLA) down about $15 last week alone, some may think that’s a great time to go short in our Perfect Tesla Trade strategy and stick with that main trend. 

Au contraire… 

Shorting a stock that's already down big is risky business, and here's why…

When a stock has already taken a nosedive, it's often because investors have reacted to negative news or a disappointing earnings report. The price may reflect all the fear, uncertainty and doubt in the market, meaning the bad news is already “priced in.”

That leaves big potential for a bounce back that can bite you in the butt…

Exactly as it would have on Monday if we’d entered a short position late last week, just assuming the downtrend would continue.

Stocks that are down substantially could be primed for a correction or a bounce back — especially in an explosive stock like TSLA. Markets can overreact, and when they do, they often correct themselves. 

If you short a stock at its low point, you could be caught off guard by a sudden rebound.

Oftentimes, the best thing to do is be patient, which is why we didn’t issue a trade last week because I’m not a big fan of shorting in the hole. 

And it’s a good thing we didn’t because TSLA ripped $7 premarket before going even higher on the open and through the day. 

There are no guarantees — ever — in trading. But that’s why you have a system and a plan, and you stick to it!

As always, careful analysis and risk management are key to navigating these choppy trading waters.

Stay tuned!
The team at Lance Ippolito Trading

Lance doesn’t want the CCP spying on him, so you’ll never find him on TikTok. Same goes for other social media sites, which are filled with impersonators and scammers. 

You can only find him on his personal YouTube Channel — smash that Subscribe button! https://www.youtube.com/@LanceIppolito

And in his private Telegram channel​: https://t.me/+-gVwEIwGJhplMTgx 

*The information in this article is for educational purposes only and does not constitute financial advice. Trading involves risk and is not suitable for everyone.
Disclaimer:

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