BTST trading techniques
Firstly let me clear this thing that Buying today selling tomorrow are not easy as you think.
At the end of the article, you will be confident of BTST trading techniques.
So let’s start working together.
Which Segment Is Better For BTST Trading Techniques?
As per the following trading days, margins have been increased for futures by SEBI.
An entire margin has required for BTST trading strategy in the future.
For example, previous margins for buying of nifty would be 30000 (This is, for example, only), SEBI has increasing margins by part wise, firstly it has increased margins by 25%. After it has increased margins by 50%, after it has risen by 75%, after September 2021 onwards, margins of futures will increase by 100%
After increasing margins by 100%, a trading individual may require significant capital to trade in futures.
For example, before increasing the margins, nifty capital should be 30000; after increasing the margins up to 100%, Nifty money should be up to 300000
If your investment is significant (huge), you may go for futures for BTST trading techniques.
If your investment is small, my suggestion is, does not to go for the future.
For small investors, my suggestion is to trade-in options.
The price paid for buying an option is known as the option premium price.
The buyer pays the option premium to own the option, and the seller of the options receives the bonus.
Margins for the options will be less compared to the futures.
For example, the margin for the nifty futures will be 300000; at an instant price, the option margin should be 20000.
Price action for options will be less compared to the futures.
Instead of taking one lot in the future, you can take many lots of options compared to the future”s. However, the lot size will be the same.
How To Choose Strike Price In Options For BTST Trdaing Strategy ?
A call option will be known as Inthe money option when the strike price is lower than the underlying asset price. On the other side, a put option will be in the money option when the strike price is higher than the asset price.
At the money option
When the stock price is equal to the option’s strike price, that option is known as the money option.
Out of the money option
A call option will be Out the money option when the strike price is higher than the underlying asset price. On the other side, a put option will be the Out-of-the-money option when the strike price is lower than the stock price.
Above are the three types of options strike prices; you may doubt which option strike price I will take?
But no worry, I will make it clear that what option strike price I should trade.
I will also clear that how to pick the right scrips for BTST trading techniques.
All the scrips which had taken will be the most probable ones for risk to reward.
1 . Slightly out of the money strategy.
I recommend selecting a slightly out-of-the-money option strike price for BTST trading techniques.
For example, If nifty is trading at 14888 prices, you are willing to take BTST trade at options; what price will you select for BTST trading in options?
I recommend taking 14950 strike price because you are expecting the market to go bullish from tomorrow. If the market has opened at 14900 and above, you will be in at the money price, and your premium will perform profitability.
Taking 15000 and 15100 strike price is entirely out of the money; at this time, if nifty performing on the bullish side, your premium may not perform much profitability due to time decay.
Taking 14700 and 14800 strike price is entirely in the money; at this time, if nifty is performing bullish side, you will be in losses.
Taking 14800 and 14850 strike price is entirely at the money; at this time, if nifty is performing bullish side, your premium will be in the range of In- the- money, and you may not be able to get many profits.
I recommend not to take out of the money, at the money or In -the -money for BTST trading techniques.
I prefer to take slightly out of the money, but not entirely out of the money.
Selection of the option strike price can apply to all stocks.
How To Book Profit In BTST Trading Techniques?
- After entering the trade, you have to monitor the price action of the equity stock.
- You have to set the target in the equity stock and stop-loss also in the equity.
- After hitting the target in the equity, you have to close the position in options at the instant price
- After hitting the stop loss in the equity, you have to close the position in options at the instant price
- When taking the BTST trade, you have to monitor the stock’s equity price action and watch and observe your option strike price.
How To Select The Stock For BTST Trading Techniques?
I always recommend scanning the stocks that had near the supply and demand zones.
Also, the stocks that had crossed RSI and moving average.
I trade stocks that are ready for the breaking of the trend line.
Trend line breakouts are the most probable trades and profitable ones.
I frequently use several patterns like a trend line breakout and my patterns designed for trading.
I will show how to draw the trend line for any scrip.
I am not a trainer and tutor, and I am a learner. I will make clear that what I had learned to be a successful trader.
2 . Trendline Breakout Strategy
Trend line breakouts are primarily helpful for BTST trading techniques.
Sometimes I will get a 1:4 risk-reward ratio in BTST trading techniques by applying trend line breakout strategy.
If supply and demand zones match the trend line breakout pattern, the trade will be the most probable and profitable.
For the BTST trade, I use a 15-minute time frame chart, and I will make a trend line for the stocks that cross the RSI 50 and moving average.
After drawing the trend line, I will select the option strike price slightly near out of the money.
I request for beginners to start trade with one lot size.
After breaking the drawn trend line on the bullish side or bearish side, if it broke on the bullish side, take slightly out of the money call option.
If it has broken on the bearish side, take slightly out of the money put option.
But remember that you have to check whether RSI and moving average are on your side.
3 . Moving Average Cross Over Strategy
Entering the trade at the moving average crossover and the RSI should be above the 50 levels.
Book profits according to your risk-reward ratio, and stop-loss should be below the moving average.
One thing you have to remember while trading the moving average strategy, if your scrip had opened in gap up, up to 2-3%, you can book the profits as shown above.
This cross-over can be applicable for the bearish side gap down also.
What Are The Target And Stoploss?
- Monthly and weekly support and resistance are the target and stop-loss.
- If you had entered call option trade, your target would be the next resistance.
- If you had entered put option trade, your target would be the next support.
- I will prefer nearly the next resistance and support, whether weekly or monthly.
- All these indicators, support, and resistance levels would be available under the platform Tradingview
- The trading view platform will make your work more efficient and accurate.
- If you follow the above rules strictly, BTST trades are the most profitable and probable trades.
- In trading view platform you can also set the alerts for moving average crossover and trendline break out.
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