The cheapest way to buy Tesla (TSLA) stock is with a good broker and plan. In this guide, I’ll show you exactly how to put it all together.
Buying TSLA shares might seem like a daunting process — especially if you’re a newer trader. That’s why we’ve written a step-by-step guide to walk you through the process and help you understand the most affordable way to buy Tesla stock.
If you look at Tesla’s chart, you might think it isn’t cheap anymore. I like to say that the best time to start trading was 20 years ago — but the second best time is today.
Let’s get into it…
Table of Contents
- 1 How to Buy Tesla Stock (NASDAQ: TSLA)
- 2 Should You Buy Tesla Stock?
- 3 One Platform. One System. Every Tool
How to Buy Tesla Stock (NASDAQ: TSLA)
Here are five simple steps to buy Tesla stock.
1. Open a Brokerage Account that Lets You Trade Tesla Stock
Any U.S. broker should let you trade Tesla stock. In addition to letting you trade Tesla shares, a good broker will provide educational materials, research tools, and quick executions.
Pay attention to commissions and fees when choosing a broker. This may be the difference between a profitable trade and a losing one.
I give some good tips on choosing a broker in this video:
One of my top criteria for choosing a broker is their trading platform. I use StocksToTrade, which will let you trade with the most popular brokers.
StocksToTrade has assembled the best charts, the most versatile screeners, the most probing news scanners, and more to create a one-stop trading machine. I think it’s the best way to trade.
2. Decide on Your Investment Goals and Risk Tolerance
Are you saving for retirement? Or are you looking for short-term returns?
Trading Tesla stock has to fit your investment goals. Hitting your goals is why you’re trading in the first place!
Tesla stock is what is called a “growth stock.” It’s a sector leader and projects to keep growing…
But it can be volatile too. That’s not great if you can’t afford to lose some or all of your investment.
3. Do Research on Tesla Stock
There are two main types of research you can do on a stock: fundamental and technical analysis. Some traders and investors use one type of analysis more than the other, but both are important to understand:
- Fundamental analysis involves looking at the value of the company and stock. This can involve looking at the company’s financial reports, revenue, dividends, and fundamental indicators like price-to-earnings (P/E) ratio. These fundamentals help you understand the underlying value of the stock, which may eventually be reflected in the stock’s actual price.
- Technical analysis involves looking at a stock’s chart. Chart patterns can help you identify trends that fly under the radar, and find trading opportunities that others don’t see.
In addition, you should keep on top of Tesla news, as well as sector and macro-economic developments.
Upcoming events like product launches or earnings reports can massively affect a stock’s value. Larger pieces of news or developments that affect the company or sector can also be powerful catalysts.
4. Build Your Tesla Stock Trading Plan
A trading plan will help you focus on your goals, and avoid impulsive moves. Your trading plan could be long-term or short, but it should always focus on your goals.
A good trading plan should include:
- Entry. The price you want to buy Tesla stock at.
- Risk. The amount of money you’re willing to risk losing.
- Goal. The amount of money you want to make on your trade.
Here’s my guide to building a trading plan.
If you’re investing, your goals and risk will be different. They may be for your position to grow by a certain percentage each year…
Even if you’re intending to hold Tesla stock long-term, I think you should still have a clear risk outlined to safeguard your gains. You can always buy more Tesla stock — as long as you still have the money to do so!
5. Place Your Tesla Stock Order
Once you have a good plan, it’s time to put it into action by placing your Tesla stock order.
There are a few steps to this:
- Place a buy limit order. You should always place limit orders, as opposed to market orders. This way you’ll be sure that your actual entry matches your trading plan.
- Set a stop-loss. You should always have a stop-loss set, even if it’s just mental. I recommend a physical stop-loss if you can’t watch the market every day.
- Follow your trading plan. It’s tempting to adjust your trading plan on the fly. But a wishy-washy trading plan is a poor foundation for sustainable success.
Should You Buy Tesla Stock?
You should buy Tesla stock if it fits your investment 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.