How to Trade Rivian Shares: RIVN Stock Trading Guide

Rivian Inc., an electric vehicle manufacturer, has experienced significant market fluctuations since its IPO in 2021. Despite not being profitable as of 2024, investor optimism is evident in Rivian stock due to its significant market capitalisation.

Are you thinking about trading in Rivian stocks? This article will equip you with the knowledge to trade Rivian stocks, explaining both the processes and the considerations involved.

Main Points:

• Rivian share CFDs allow traders to gain exposure to Rivian's stock price movements without owning shares directly.
• Technical analysis tools such as moving averages, support and resistance levels, can help traders make informed decisions based on Rivian's stock price movements.
• Evaluating Rivian's financial metrics, alongside its qualitative factors, can provide a comprehensive view of the company's potential.
• Different strategies can be applied to Rivian stock trading, including day trading, swing trading, and position trading.

Understanding Rivian (RIVN) Stock Chart

Understanding Rivian stock charts can feel overwhelming at first, but with a little study, it becomes easier. As an example, let’s explore the stock price chart of Rivian Automotive (RIVN) on a platform like Plus500.

When you open Rivian stock chart on the Plus500 platform, here's a breakdown of what will be revealed:

• Ticker Symbol: RIVN is the ticker symbol used to denote Rivian shares on major trading and investing platforms including the Plus500 platform.
• RIVIAN (RIVN) Closing Price: This represents the last price at which Rivian stock traded during regular market hours, indicating the stock's performance for a day.
• RIVIAN (RIVN) Bid and Ask Price: At the market close on July 3, 2024, the chart shows the bid price (Buy Rate) of Rivian stock at $14.45 and the ask price at $14.34. The bid price is the highest price a trader is willing to pay to buy Rivian stock, while the ask price is the lowest price a trader is willing to pay to sell Rivian stock.
• RIVIAN (RIVN) Bid-ask spread: This is the difference between Rivian Buy Rate (bid price) and Sell Rate (ask price). At the market close on July 3, 2024, the spread of Rivian stock was $0.11.
• Purple vs Pink Line: The lines illustrate price movements during regular trading hours. The purple line typically indicates the buy rate, reflecting price increases, while the pink lines indicate the sell rate, reflecting price decreases.
• Percentage Change: As seen on the information icon at the top left corner of the chart, Rivian's closing price on July 4, 2024, reflected a daily percentage change of approximately -1.56%.
• Timeframe Options: The platform allows you to select different timeframes (5min, 1Hr, 5Hr, 1Wk, 1Mth, 1Yr), enabling you to view Rivian's price movements over various periods—from minutes to years. This feature helps in understanding narrow and broader market trends.
• X-axis (Horizontal): This axis displays the timeframe you’ve selected (day, week, month, etc.), allowing you to track how Rivian's stock price has changed over time.
• Y-axis (Vertical): This axis shows the relative value of Rivian's stock price in US dollars, giving a clear view of the stock's price levels across the selected timeframe.

By understanding these elements, you can begin to interpret Rivian stock charts and make informed trading decisions.

How to Trade Rivian Stock

Through Contracts for Difference (CFDs), traders and investors can gain exposure to Rivian's stock price movements without directly owning any shares in Rivian Inc. Rivian share CFDs are a derivative instrument that mirrors Rivian’s stock price, allowing traders to profit or make losses from the differences in its price movement.

An Illustration of Rivian Share CFD Trading

Let's look at an example of trading Rivian share CFDs:

Imagine Rivian stock is trading at $20 per share, and you want to enter a CFD contract for 100 shares. This represents a notional value of $2,000 (100 shares x $20/share). With leveraged trading, you don't need the total amount upfront. Let's say the leverage offered is 1:10, requiring a 10% margin. You'd need to deposit $200 (10% of $2,000) to open the position. Remember, you need sufficient funds to cover margin and potential price fluctuations.

If you believe Rivian's stock price will increase, you can open a buy position. Conversely, if you believe Rivian’s stock price will decline, you can open a sell position.

In order to manage risk, Plus500 allows you to set stop-loss orders to close your trade at a predetermined price automatically. Any profit or loss will be reflected in your account balance when you close your position (either manually or by stop-loss orders).

On the Plus500 trading platform, you can also trade share CFDs of various electric vehicle (EV) companies, such as Tesla (TSLA), Lucid Group (LCID), or BYD (1221.HK).

Steps to Buying and Selling Rivian Share CFDs with Plus500

To begin trading Rivian share CFDs, you can take the following steps:

• Open a Trading Account (live or demo account).
• Access the trading platform on your device.
• Locate Rivian CFDs on the platform by using the search function or navigating to the "Stock section” and searching for Rivian (RIVN).
• Analyse and research Rivian's stock performance and insightful news to determine your trading direction (buy or sell).
• Decide how many Rivian shares you want to trade (remember, Rivian share CFDs represent the stock price of Rivian Inc.).
• Set stop-loss and take-profit orders to manage potential losses and secure profits at your desired price points.
• Execute "Buy" to go long or "Sell" to go short.

What Are Rivian Stock Trading Hours?

Rivian Automotive (RIVN) stock trades electronically on traditional exchanges like the New York Stock Exchange. The regular trading period for Rivian shares on the NYSE is between 9:30 AM and 4:00 PM Eastern Time (ET). However, Rivian shares can be traded during pre-market hours from 4:00 AM to 9:30 AM ET and after-market hours from 4:00 PM to 8:00 PM ET​.

The pre-market hours allow you to react to news that might have emerged overnight or in other global markets before the NYSE opens. Meanwhile, the after-hours allow you to react to important events like earnings reports or press releases that occur after the NYSE closes.

On the Plus500 webtrader platform, traders can observe the price movement of Rivian shares in real-time and trade from Sunday at 10:00 PM CET to Friday at 10:00 PM CET.

* Please note that trading platform hours are subject to the individual operator.

How to Analyse Rivian Stock

Before trading Rivian share CFDs, you want to have a comprehensive narrative about Rivian Automotive Inc., covering the company's technical and fundamental perspectives.

Rivian Technical analysis

There is a toolbox of analytical methods for understanding the performance of Rivian stock. However, moving average crossovers and support or resistance breakouts are considered the most well-known trading strategies.

How to Use Moving Averages to Trade Rivian

Moving averages smooth out price fluctuations of Rivian stock, thus reflecting its overall trend. The Plus500 trading platform allows you to overlay moving averages onto the chart of Rivian stock's price.

A popular strategy for using moving averages involves watching for crossovers. This is when a shorter-term moving average crosses above or below a longer-term moving average. For example, if Rivian's 20-day SMA crosses above its 100-day moving average, this is called a “Golden cross”, which is considered bullish for Rivian stock. Conversely, if Rivian's 20-day moving average crosses below its 100-day moving average, this is called a "death cross" and is considered a bearish signal.

How to Use Support and resistance to trade Rivian

Support and resistance are another overlay that can be used to analyse Rivian's stock price chart.
On Rivian's stock chart, support levels act like a floor, preventing the price from falling too low in the short term. Conversely, resistance levels act like a ceiling, making it difficult for prices to break through.

A rise in Rivian's stock price beyond a resistance level is commonly a bullish signal, while a dip below a support level is usually considered bearish. Furthermore, if the price of Rivian tests a level repeatedly, this may signal a potential break out of that zone.

Fundamental Analysis of Rivian Stock

It's worth analysing the company's quantitative and qualitative details to sift through the noise of Rivian's historical stock price movement.

Quantitative Analysis of Rivian Stock

This involves analysing key financial metrics of Rivian Inc., including:

1. Revenue: Revenue reveals how much money Rivian brings in. It's the top line on the company’s income statement and represents the core income from selling electric vehicles.
2. Net Income or Loss: This bottom line figure shows Rivian's profitability. Analysing Rivian's net income (or loss) alongside its revenue growth is to understand the trade-off between short-term profitability and long-term potential.
3. Earnings per Share (EPS): Dividing Rivian's earnings by its outstanding shares gives us its earnings per share (EPS). This metric shows profitability per-share basis, allowing easy comparison with other automakers.
4. Price-to-Earnings Ratio (P/E): This ratio is calculated by dividing Rivian's current stock price by its trailing twelve-month earnings per share (ttm EPS). It indicates how much investors are willing to pay for $1 of Rivian's current earnings. If the Rivian P/E ratio is high, it may be a sign of investor optimism about future profitability.
5. Return on Equity (ROE) and Return on Assets (ROA): These ratios reveal how efficiently Rivian uses shareholder investments (ROE) and its overall assets (ROA) to generate profits. A rising ROE and ROA may indicate increasing efficiency in generating profits.

Qualitative Analysis of Rivian Stock

Analysing the qualitative details of Rivian Inc. helps to get a truer picture of the company's potential. Qualitative analysis of a company focuses on the following:

• Business Model: Rivian's core business is selling electric vehicles (EVs), but there may be additional revenue streams, like servicing, software subscriptions, or data monetisation. Understanding the company's complete revenue generation strategy is crucial.
• Competitive Advantage: It is important to know what sets Rivian apart from established automakers like Tesla (TSLA), Ford (F), General Motors (GM), Toyota (TM), etc. Is it their innovative technology, brand recognition from Amazon backing, or a focus on a specific EV segment?
• Management Team Strength: Does Rivian have a proven leadership team with experience navigating the automotive industry and the complexities of a high-growth startup?
• Potential Risks: Considering the biggest challenges Rivian faces, like regulation, incentives, competition, battery supply chain constraints, etc. These considerations allow for a more balanced assessment.

Advantages and Disadvantages of Trading Rivian Stock

Advantages of Trading Rivian Share CFDs

• High Return Potential: By actively monitoring Rivian's market movements and making informed decisions, traders can capitalise on short-term price fluctuations. This offers the potential for higher returns compared to investing in Rivian Inc. directly.
• Flexibility: Traders can adjust their strategies based on their risk tolerance and market insights to take advantage of changing market conditions specific to Rivian.
• Control: Traders can choose entry and exit points, set stop-loss and profit levels, and manage their risk exposures more precisely.

Risks of Trading Rivian Stock

• High Risk: Trading Rivian stock involves a higher level of risk compared to passive investing. Therefore, traders must possess a solid understanding of risk management concepts.
• Time and Effort: Actively trading Rivian stock requires traders to continuously monitor the market and make informed decisions, which may be time-consuming and stressful.
• Transaction Costs: Increased frequency of trading Rivian stock may result in higher transaction costs, commissions, and associated trading fees.
• Tax Implications: Taxes on short-term capital gains can impact the profits generated from trading Rivian stock, affecting overall returns.

Developing a Rivian Stock Trading Strategy

Trading Rivian stock is possible with various trading strategies, each with its unique approach to capturing potential market opportunities.

Rivian (RIVN) Day Trading Strategy

Day trading Rivian stock involves buying and selling the stock price of Rivian Inc. to capitalise on short-term price movements within the same trading day. This helps traders to avoid the risk associated with holding positions overnight. However, frequent day trading can result in transaction costs, which may erode potential profits.

Rivian (RIVN) Swing Trading Strategy

This involves holding Rivian stock for a duration of time, usually from a few days to weeks, aiming to profit from short-term price movements. This provides traders with more time to analyse market trends and make informed trading decisions.

However, swing trading on Rivian stock price increases exposure to sudden market events that can cause significant price movements. It also requires significant time commitment to analyse market trends and monitor positions.

Rivian (RIVN) Position Trading Strategy

This strategy involves holding Rivian stock for an extended period, usually several months to years, to profit from major market trends. This approach can offer higher potential gains by aiming to profit from long-term price movements.

Nevertheless, this strategy may limit the ability to take advantage of short-term market opportunities in Rivian stock. In addition, position traders are exposed to sudden market events that can adversely erode gains.

Executing Trades on Rivian Shares CFDs

Understanding different order types is essential for trading Rivian share CFDs. Here's a breakdown of key concepts:

Entering a Trade: To execute a position on Rivian shares, traders can use either of the following order types:

• Market Orders: This allows traders to execute immediate trades on Rivian shares at the current market price.
• Pending Orders: These allow you to set specific entry points. For example, a buy-stop order would buy Rivian CFDs if the price reaches a certain level you specify. Conversely, a sell-stop order would sell Rivian shares when its price falls to a certain level.

Exiting a Trade: To exit a position when trading Rivian shares, traders can use either of the following order types:

• Manual Closing: You can manually close your Rivian CFD positions at any point.
• Stop Loss Orders: This automatically exits your buy or sell trades on Rivian CFDs at a specific price point.
• Trailing Stop Orders: This automatically closes your Rivian CFD position at a specific profit threshold to lock in gains.

Conclusion

Trading Rivian shares offer an opportunity to gain exposure to the price fluctuations of Rivian stock. By conducting both fundamental analysis and technical analysis of Rivian stock and implementing risk management practices, traders are equipped to make the right decisions on when to enter and exit a position on Rivian shares.

Frequently Asked Questions (FAQs):

Where Can I Trade Rivian Share CFDs?

Plus500 trading platform allows you to trade Rivian shares without having to be a Rivian shareholder. Plus500 offers leverage, low spreads and advanced trading tools to manage risk when trading Rivian shares.

What Is the Difference Between Trading and Investing in Rivian Stock?

Trading Rivian stock means speculating for short-term gains daily, weekly, or monthly while investing in Rivian, which focuses on the long-term growth potential of Rivian, holding the stock for months or years.

When Is Rivian Stock Overbought or Oversold?

Technical indicators like the Relative Strength Index (RSI) can suggest whether Rivian is potentially overbought (above 70) or oversold (below 30), but these aren’t foolproof. It's recommended to combine this with other research to make informed decisions.