To make the rimming mixture, add salt and chili powder to a small rimmed plate. Mix together until combined. Rub the rim of a cocktail glass with a lime wedge and roll through the rimming mixture. Set aside.
To make the watermelon juice, add watermelon to a blender or food processor. Blend until smooth then strain through a fine mesh sieve. Discard leftover solids.
To make a margarita, fill a cocktail shaker with ice. Add 2 oz watermelon juice, tequila, lime juice, agave, and jalapeño slice(s). Shake well, about 30 seconds.
Fill rimmed cocktail glass with crushed ice.
Strain cocktail into prepared glass and garnish as desired. Serve.