The cheapest way to buy Tesla (TSLA) stock is by learning how to execute your Tesla trade well. In this guide, I’ll tell you just how to do that!
Sounds like a tall order? It doesn’t have to be. Tens of thousands of people do it everyday.
I teach new traders everything I had to learn for myself when I started trading. That’s why I’ve written a beginner’s guide to the most affordable way to buy Tesla shares.
I wouldn’t exactly call Tesla stock “cheap.” But if the price keeps increasing the way it has the past 10 years, its current price is going to seem like a bargain!
Table of Contents
- 1 How to Buy Tesla Stock (NASDAQ: TSLA)
- 2 Should You Buy Tesla Stock?
How to Buy Tesla Stock (NASDAQ: TSLA)
Here’s how to buy Tesla stock.
1. Get a Good Broker that Lets You Trade Tesla Stock
This is the first step to buying any stock.
Choosing a broker isn’t the hardest thing. Here’s what I look for:
- Low commissions and fees
- Fast trade executions
- Access to a wide range of stocks
- Good customer service
- A great trading platform
My personal pick for the last item is StocksToTrade. StocksToTrade integrates with most of the top brokers, and it’s hell on wheels for the things traders really care about.
It should be good for trading — I helped build it.
StocksToTrade has dynamic charts, a selection of pre-built stock screeners, awesome add-on alerts services, and more. It has everything I use to trade in one easy place.
2. Determine Your Goals and Your Risk
Every trader wants to make money — but unless you have a clear idea of your goals you probably won’t achieve them.
Some traders are looking for short-term gains. Others want to invest for retirement.
If you’re an active trader, the 100% annual return Tesla has had for the past 10 years might not be enough for you. I look to make 5–10% per trade. Most of my trades take only minutes.
Many long-term traders and investors are looking for exactly the kind of chart Tesla has. Tesla stock is what is called a “growth stock.” That means it has a track record of growth, which is usually a good sign for future gains.
The flip side of this is volatility. Make sure you only risk what you can afford to lose.
Your job as a trader is to profit from volatility, do NOT fall in love with any trade or asset as a trade is not profitable until you lock in your profits & getting emotional can muddy the waters. Similarly, it's difficult to cut losses fast if you become too emotionally involved
— Timothy Sykes (@timothysykes) December 7, 2021
3. Do Your Research Before Buying Tesla Stock
There are several ways to research stocks.
First, there are indicators of the company’s value, like its sales figures, debt, and more complicated indicators like price-to-earnings (P/E) ratio. These indicators all fall under the category of fundamental analysis.
Short-term traders tend to look at charts more than fundamental indicators. Short-term price moves and volatility tend to relate more to market sentiment than the stock’s “real” value.
This is called technical analysis. It sounds complicated, but it doesn’t have to be.
I tell my students to pay attention to volume. This is one of the best indicators of an upcoming price move.
I also pay attention to news. The value of Tesla stock is heavily tied to future growth projections. News can really affect this perceived value.
4. Have a Trading Plan
After you’ve done your research, you should have an idea of what you should pay for Tesla stock, and how much you want to profit off of your trade.
Having a concrete trading plan is the best way to keep from overpaying for Tesla stock.
Write down your preferred entry, and how much of a win you’re targeting.
You also need to define your risk. If the stock price falls below your risk — that’s the point you have to cut your losses!
Without a trading plan, you’re just gambling. That’s a good way to lose your trade.
If all this sounds overwhelming, I get it. That’s exactly why I created my Trading Challenge.
In the Trading Challenge, I teach students all the things I had to learn for myself. Things like creating a good trading plan and executing it well.
You don’t have to go it alone. If you’re willing to put in the work, I’m willing to help you grow into the best trader you can be.
5. Enter Your Tesla Stock Order
Trading is 90% preparation. Now that the hard part is over, it’s time to place your Tesla stock order.
Here’s the step-by-step:
- Always use a buy-limit order. Market orders can execute for any price. This is not the cheapest way to buy Tesla stock — and it can be dangerous in stocks with less liquidity than Tesla.
- Cut your losses quickly. As soon as you hit your risk you NEED to exit the trade. Your number-one job is to protect your account. If a trade isn’t going your way, there’s a poor chance that it will course-correct at the last moment.
- Don’t get greedy. You always want to sell into strength. The way that I’ve made $7.4 million in my 20-plus years trading is by going for singles. That’s the best way to become profitable that I’ve seen in all my experience trading.
Should You Buy Tesla Stock?
You should buy Tesla stock if it fits your trading goals, and your research indicates that there’s an opportunity.
Through much of 2021 and 2022, Tesla stock was near all-time highs. There was a lot of anticipation about its 3-for-1 split in August of 2022… which led to a slide of more than 60% to end the year.
TSLA’s value has climbed nearly 90% through the first five months of 2023. Elon Musk is once again the world’s richest man. With Tesla sales rising in China, there may be more potential to unlock here.
Pros of Buying TSLA Stock
There are a number of advantages to buying Tesla stock.
- Electric Vehicles (EV) Sector Leader: Tesla is the leader of one of the fastest growing sectors out there.
- Elon Musk: I’ve joked that we should have an alert service based around Musk’s tweets. He’s tweeting a bit more often these days — but when Musk says or does something important the market tends to respond.
- Clean Energy Leader: Tesla is also building infrastructure for its cars. That infrastructure has gotten so good that Ford is now using it.
Cons to Buying TSLA Stock
Here are the cons you should weigh when making this decision…
- Crazy Volatility: Tesla is awesome because it moves like a penny stock. But if you’re the kind of investor who doesn’t use stop-losses or set price alerts, you may be in for some rude surprises.
- Growing Competition: Tesla’s EV head start is falling away, with traditional automakers GM, Ford, and Volkswagen and newer players like Rivian and Lucid all growing their market share.
- Potentially Inflated Price: Tesla needs to deliver on its promise for its stock to be worth anywhere near the price it currently commands. TSLA’s P/E ratio is over 61, as of June 2023. Ford’s is just over 4.5.