Whats is BTST?
It takes two trading days (T+2) for the purchase of a share on the stock market to appear in your demat account. Opportunities, however, do not wait. What if you want to sell the stock immediately after it rises over your purchase price the very next day?
If your broker allows for BTST trading, you can use it even if the stock hasn’t yet been delivered to your demat account.
After the buy order, you have two trading days to complete the BTST trade. In between intraday and cash market deals there lies BTST trade. If you acquired a stock today at 10 am, you must close out the position in intraday trading before the market shuts.
What should you do if your technical analysis suggests that the prices could increase the next day. Answer will be yes if it is allowed. In contrast, you can only sell shares in a delivery-based cash deal once they have been delivered to your demat account.
Two trading sessions are required for this operation. In just two days, a lot can occur. The BTST trade was introduced in order to prevent delays in the cash sector and same-day settlement of intraday trade.
You should be proficient in technical analysis in addition to following both stock-specific and general news events if you want to profit from BTST trades. It entails identifying the significant price movements on trading charts. In addition, you need to use specific trading tactics to limit your greed and prevent losses. Read on:
Select Liquid Stocks
Highly liquid equities should be used for BTST trading so that you can sell your position without becoming trapped in it. Search for BTST trades in large-cap stocks and those included in the index.
Keep in mind that BTST trades are not permitted for equities in the Trade to Trade group, GSM (Graded surveillance measures), or ASM (Additional surveillance measures).
Invest before a Major Event
When you frame your BTST trades around a significant news occurrence, you will maximise your returns. This could either be stock-specific news, such business earnings, winning a new project or deal, merger and acquisition activity, buyback and dividend announcements, or political and economic events, including RBI policy, GDP figures, and election outcomes. A BTST plan that is implemented just before a significant event may generate lucrative short-term opportunities.
Put Stop loss and Target Prices
You must set a stop loss as soon as you decide on your BTST position and before you execute the trade. This is the price at which the sell order will be automatically carried out. Losses are capped by a stop loss.
For instance, you might forecast a stock to increase but it moves in the opposite direction. You must have a price point (on the downside) beyond which you cannot bear the losses if you want to minimize your losses. This is your stop-loss.
In a same manner, you must set an upward target price. The stock market fluctuates. A trend reversal might occur in a matter of seconds. The target price aids in controlling your appetite. The following morning, if the stock has risen to your desired levels, you must book profits rather than holding out for higher returns later in the day.
Price Breakouts in Candle-stick Charts
Run the stock’s 15-minute candlestick chart that you want to purchase for BTST purposes. Based on opening, high, low, and closing prices, this chart illustrates the purchasing and selling tendency. You may have been tracking the market since the morning. Even though the actual activity usually occurs in the final leg of the transaction after 2:00 PM
This is the time that intraday traders liquidate their positions. If the stock price rises over the chart’s resistance level between 3:00 and 3.30 PM, it suggests the uptrend might continue to the following transaction. This implies that you might save it for the subsequent session. It’s time to sell the stock in intraday transaction if the price breaks through its support level.
Trading is a risky endeavour, whether it is intraday or BTST. To play the game well, you need both skills and a good EQ. Recognize all the dangers, discover strategies to reduce them, and always be ready for the worst.
The biggest risk with BTST is that a lot can occur between the closing and reopen 17 hours later. You will undoubtedly succeed in making a wonderful living if you are consistently ready to deal with unpleasant outcomes. To make money on BTST transactions, you need a clear head and a precise plan.