Best 5 BTST Trading Strategies By Espresso

Best 5 BTST Trading Strategies for Online Trading

BTST trading is one of the popular trading strategies used by traders in the stock market. The full form of BTST is Buy Today Sell Tomorrow. As the name suggests, the BTST strategy is a short-term strategy wherein the trader buys shares either in cash or in the futures and options section and then sells these off the next day.

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The trader chooses to sell the shares in a day rather than keeping the shares for long-term gains or holding the shares for a longer period of time. Therefore, the BTST trading strategies are mainly used for stocks that traders expect to open in green on the next day as compared to the price prevailing at the time.

BTST trading and intraday trading are not similar, and some people tend to confuse these. In the BTST strategy, traders buy one day and sell the shares the next day, unlike intraday trading, where traders purchase and sell shares on the same day.

Now, let us get into the top BTST trading strategies that you can deploy for maximum gains.

Top BTST Trading Strategies That You Must Know

Here is the list of the best BTST trading strategies that you can use to earn gains:

  • Keep a stop-loss in place

BTST trading strategies can help you earn profits and maximise your gains, yet it is always essential to be cautious when applying this strategy. It is always a good idea to keep a stop-loss strategy so that you can avoid too many losses if the price falls the next day. In addition, you should set aside a limit of losses that you are willing to take and the price that you are willing to sell at to avoid any further losses.

  • Investing prior to any major event

A great time to use the BTST strategy is when there is a major expected event about to happen, which can lead to volatility in the stock market. Many events like election results, RBI policy declaration, company results day, or any other important announcement made by a company can make the prices of the stocks rise for a short period of time, making this the appropriate time to deploy a BTST strategy.
Also Read: What is Volatility Index & It's impact on Equity Market?

  • Trade in stocks that are highly liquid

BTST trading involves tracking the prices of shares minutely. Therefore, it is advisable to trade in about 2 or 3 different stocks at one time so that you can keep track of the price of shares carefully and in a much better manner. Also, as you will square off the position on the next day, you must invest in highly liquid stocks such as some index-based stocks, large-cap stocks, etc., as they are traded in high volumes in the stock market, and you will not have difficulty in selling them off.

  • Make use of the 15-minute candle day analysis

The 15-minute candle day analysis can help traders identify the right time to use the BTST trading strategy. As a trader, you must take note of the low and high of the first 15-minute body of the candle. In the body, the top line is considered the resistance, and the bottom line is considered the support.

Most traders tend to track their stocks from 9:30 am. If the price of the stock crosses the line of resistance and is above the volume-weighted average price, then that is considered the right time to purchase the stock. On the other hand, if the price of the stock crosses the bottom support line and falls below the volume-weighted average price, it is the right time to sell the stock.

The best time to use the analysis is between 3:00 pm and 3:30 pm. This is because the market is expected to buzz at around 2 pm. In the time between 3:00 pm and 3:30 pm, greedy traders and people who are new to trading generally try to square off the trades. So the half an hour time window should be enough for you to take a call on whether you should square off your position on an intraday basis or if you want to keep it for BTST trading.

In this, the trader needs to keep a check on the low and high between 1 pm and 3 pm. If, in the last half an hour, the price of the stock tends to remain above the volume-weighted average price and crosses the resistance line, you can use the BTST trading strategy.

  • Book profits when you achieve the targets

Fear and greed are two emotions that most traders, as well as investors in the stock market, are well aware of. Therefore, before you enter the stock market, deciding on the entry price as well as the target price of the stock is essential. Once you have achieved the target price, it is essential to book the gains and not let greed take over.

Sometimes, when you keep the stock hoping for the price to rise even further, the trend goes in the reverse direction, and you end up making losses instead. Therefore, even if you feel that the prices will rise above the target set by you, closely monitor the stock. Also, set trailing stop-loss once you are in the profit zone.

Conclusion

These are some of the top BTST trading strategies that you can use if you are interested in BTST trading. It is essential that you understand the risks that are involved in trading and carefully evaluate your risk-taking ability before you invest. Predicting the stock market is tough, and even if you use the best BTST trading strategies, there is no guarantee of profits.

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Frequently Asked Questions

The BTST trading strategy is a good strategy for earning profits in the short term. However, trading requires skill and practice, and once you understand the BTST trading strategies, you can maximise your gains.

One of the major risks in BTST trading is the risk of facing a short delivery. This happens when the buyer from whom you purchased the stock fails to give you the delivery of the stocks before the next day ends. Thus, your obligation towards the seller to whom you had to give delivery of the shares is not met. This might lead to you facing an auction penalty.

STBT trading strategy means Sell Today Buy Tomorrow. It is the opposite strategy of the BTST strategy. STBT strategy allows you to sell your shares in the cash segment and purchase them the next day.