Thursday 11 February 2021

My Tesla short is in play

My order to short 4 Tesla CFDs was filled at the market opening, at the price 844.540 (a bit lower than I'd specified as the price gapped down a bit on the opening). Tesla went down quite quickly to about 802, before doing a bit of a bounce to 817.50, but then trended generally lower during the trading day (overnight, my time). At the closing price (804.978) I have an unrealised profit of 151.18 USD (A$203.71). Quite an impressive first day. I'll leave the position open in case this is the start of a downward trend towards what would appear to be a more realistic price based on prospective profitability if everything goes well for Tesla (around 400-450). It's tempting to close out my position and pocket my A$200 'paper profit', but I may as well stick with it and see what happens. My trailing 'stop loss' is currently at 832.60, so I should make a small profit on this trade even if the Tesla share price goes back up. The timing of this trade seems to have been incredible fortuitous (so far).

Most of my attempts at trading haven't worked out so well (but that is hardly surprising as I generally trade on 'gut instinct' and don't close out losing positions quickly enough (one of the common traits of behavioral economics is "loss aversion"). I traded the ASX200 CFD last year, intending to hold a long position as the market recovered, but instead traded too frequently and lost money on about 60% of the trades before giving up ;)

Putting the trailing in stop in place seems to be working out quite well so far, as it ensures I stick to my 'plan' for the trade and let profits run and terminate losing positions. The trick will be deciding when to do another trade after this position gets stopped out...

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