If you have ever traded JD.com stock or if you are looking to trade it in the future, this tutorial is for you.
Many who have experiences with JD.com stock are often frustrated by the way it day trades.
We will take you through what you need to know to avoid being on the short end of the stick while trading JD.com stock.
JD.com Stock Historical Overview
JD.com is a Beijing China based e-commerce company that sells goods such as: home appliances, digital products and electronics on its website.
The company has over 550 warehouses in 81 cities with almost 180000 employees to serve its large customers base.
Third-party sellers are allowed to sell their products to JD customers as well.
Many argue that JD.com is the Amazon of China.
Yes, not Alibaba its home rival.
That says a lot given what some of us may know about the previously mentioned rival.
JD.com (Ticker: JD) went public in the US in May 2014 at the modest price of about $22.
Fast Forward seven years later, it is currently trading around $38.
And that lies the problem for a supposed to be e-Commerce giant.
Here is the monthly chart of the company stock from inception to early February 2020.
Before I go through the chart, here are some of the fundamentals that have gotten many excited for years about this stock.
Sales have grown from $ 16.7 Billion to $67 Billion between 2014 and 2018.
The average sales growth over this period is 42% though decreasing year-to-year.
The Earnings per share have been improving massively in the same period with first yearly profit reported in 2017.
Yet, the chart above does not resemble a high growth stock type chart.
The stock has failed on multiple occasion to breakout above $40.
The most recent attempt in January 2020 was thwarted by the CoroanaVirus situation in Wuhan.
Prior to that, in 2018 more precisely, an all Time High just above $50 was met with a CEO moral scandal.
That led to several months long sell-off to$19.68 in December 2018.
To the point where JD.com has developed a reputation among traders in the trading sphere.
JD.com Stock: Perception on Stocktwits Community
JD.com has a decent community of followers on Stocktwits.com with just shy of 35000 fans.
Even the most loyal investors are growing awry of the price action of this stock.
Here is an example I picked up recently to illustrate the general state of mind.
Despite the many years of lack of progress in the JD stock value, some find solace in the fact that they were able to average own during the many lows as per the first chart.
Even day traders have their beef with this stock.
How can that possibly be ? I decided to do a deep dive and conducted my own research to unveil JD.com ailment.
It wanted to used illness but I refrained given the current context in early February 2020.
My goal was to find out detailed characteristic on how JD.com (Ticker: JD) trades.
Are there any patterns to be unveiled out of this scrutiny other than the obvious inability of the stock to grow over time ?
In order to accomplish this, I downloaded JD stock daily price (Open, High, Low , Close) from none other than…
You guessed it Yahoo Finance of course.
The tested hypothesis was the following: Does JD.com Stock often fade during the trading day ?
In other words, does the stock display a consistent pattern of giving back gains ?
We analyzed its daily price action from January 2017 through December 2019.
Here are out findings:
- 48% of the time, 372 days out of 771, JD.com stock Close is at least 1.25% lower than the High of the day
- This number was 39% in 2017, 56% in 2018 and 50% in 2019.
- The Day of the Week with the Most occurrence is Tuesday
The table above is a summary of the full data set in the table below
How To Benefit From This Knowledge
With the results of the research above, may I suggest that a better way to trade JD stock is through options trading ?
Because in Options trading, you as a trader can hold a long and short position simultaneously thus making it stress free about the short term variation of the price.
JD.com Option Chain is very liquid and the volatility is manageable is you stay away from the weeks of Earnings.
Here is a great example of how to made money trading JD stock post Earnings recently.
Reasonable Option contracts can be bought for as low as $10 or even cheaper if you employ one of our Expiration Day strategies.
Of course, JD.com stock as many others is featured on Finviz.com where you can perform a Screening analysis on this Ticker on Days with High movement as we described here.
Our Final Verdict
We answered the question on why JD.com has a malign reputation among traders especially on Stocktwits.com.
Then we offered an alternative to JD stock “fading” problem by using Options.
These are cheaper and provide hedge to par against any undesired behavior of the underlying stock.
TBP || Becoming A Successful Stocks and Options Trader