don't fear btst/stbt

 i have seen that many traders avoid taking overnight positions. they fear btst or stbt.

while i respect their logic or decision, i am of the strong opinion that btst or stbt are the best trading opportunities especially in mature markets where operators find lesser ways to shoo off not-so-dumb retail traders.

so, gap up or gap downs are the preferred modes of market moves for operators. 

you might notice, in mature markets like US, most market movements happen overnight. markets are comparatively quieter and range bound during the trading hours.

overnight positions are good for retail traders as well for another reason. since they can't do anything while the market is closed, they can't fiddle with position due to emotions. the patience is forced. that way full outcome of trade is ensured. you don't lose more and profit less. the loss or profit is as per full potential of that trade for that time. 

everything depends upon the direction of trade taken at close. not on fundamental level, but on technical level reflected in charts. 

only caution, and a big one.... trade small quantity that you can afford to lose, with the one you can sleep with a sweet smile of cute gamble.... 

i know some fellow traders who do only btst/stbt....rest of the time.....till 3pm, say, they are free, whistling....

btst/stbt is one of the most bang-for-the-time-buck way of trading.

two more things....first, clear btst/stbt setup may not be there everyday... but then, there is no compulsion to trade. second, btst/stbt trade is not valid a few minutes before close and a few minutes after opening. out of that zone, other factors are at play.

one more bonus idea...if the btst/stbt outcome is still a negative surprise, the move post that pro-trend may be tried.

just sharing my thoughts. your discretion and expert opinion advised. those weak in technical analysis shouldn't attempt btst/stbt. 

waiting before the next trade

http://www.mudraa.com/singlepost.php?messid=142999

dear murliji,

nice to hear from you.

now when i know that you are physically in the u.s. i miss your routine presence in mudraa more than when i knew, in the back of mind, that u were somewhere around.

your observation is good and your question pointed and right.

let me ask myself and attempt a frank answer.

-

i put the sl @ 5090spot equivalent because, at that time, 5090 was the line which, if crossed from below, would have indicated, as per my understanding, the pause or end of the downward slide.

infact, for quite sometime, nifty spot kept hovering around 5089.....almost teasing......missing it by a whisker 2-3 times before finally crossing it.

why i didn't square @ 5077spot = because that was not the line which indicated the end of downslide.....unlike 5090 which did.

the next question is - why i didn't go long @ 5090 after squaring shorts.

there are a few reasons when i rethink.

one, i was quite stressed after spending quite some time observing tick by tick in that tense situation with loaded position. i had to breathe again after coming out of the ring.

second, somewhere in the back of head, i knew that while markets may stop falling that may not itself indicate that they are about to rise.

so, as a natural instinct, i stood up the table, walked out, freshened up, relaxed a bit, returned, forgot the day trade and started looking for btst stbt opportunity.

with that fresh mind, and once out of the shadow of day trade's stress, i could focus on overnight trade signals better.

one more thing, the momentum (often unjustified and mob-minded) is difficult to change at the end, it is often hiding a different picture for the next day, when seen from a distance.

just like every morning is like a fresh puzzle and needs fresh look, every overnight set-up is a fresh riddle and needs a fresh view, detatched from the midset overhang of the day's workout.

--

the sabzimandi train analogy is right.

---

when i squared the shorts, i was not sure whether the train to the other side was ready for leaving.

the markets could easily have risen to 5030 levels before gap down the next day. in that case, it would have been prudent to book shorts and wait for shorting again.

---

say my hello to the president.

hope he or his treasury secretary or fed chief doesn't say anything which spoils my overnight weekend long position.

Why overnight BTST works!

(This article is dedicated to my friend Rishant Verma who believed in overnight BTST so fanatically that I was forced to take it seriously and discover the magic! I was so amazed by the tactic that I decided to refine it to a higher level and thus got my holy grail at the darkest hour of my trading career!)

Why overnight BTST works?

* No-loss game!

= If you blindly buy a good stock or index in the last minute of the day's trade and sell it in the first trading minute the next day, you are assured that you will not have lost anything on monthly basis. Any 1 or 2 or 3 days negative run is assuredly cancelled by handsome gap-up runs sooner than later! Atleast 50-60% success rate is assured if you don't change the stock/index, if you don't quit after the negative day (if at all) and if you ONLY BUY (i.e.BTST and not STBT).

Once having got this assurance, all you need to do is find ways and means and tactics to increase this success percentage beyond 50 or 60%. It can go as high as 90% (or even more for some stretches!)

* Big market players can't trick you!

= since the markets are closed and you can't act or react, big players can't excite you to mistake! This is the number 1 benefit of overnight btst and immunity from the no.1 weakness of any trader!

* No problem of impatience

= When the market is open, the itch of "book whatever profit u r getting before it is gone" takes it toll on you! In overnight BTST this possibility simply doesn't exist as the markets are closed.

Either you win big or lose big! No peanuts.....the rewards of being right are assured to be big!

* You are assured of gap-up openings even during bear runs!

= Everyday is a "hopeful" day in overnight BTST. During bear runs, BTST supported by some technical indicator brings handsome results. During Bull runs, there is a windfall of profits.

* Markets generally fall during trading hours and rise at the opening!

= People need time to let their emotions and herd-mentality get into the trade and start throwing stocks!

* Buying is natural, selling is not!

= Overselling is promptly reversed, overbuying doesn't!

How to BTST with RSI

BTST (Buy Today Sell Tomorrow)
STBT (Sell Today Buy Tomorrow)

BTST any good stock near closing if

1) it has exahusted near lower rsi wall (30-0) in the last few hours, or

2) it has just given a charge towards upper rsi wall (70-100) (preferably after exhausting near lower rsi wall)

3) it has remained by and large within 35-65 range for the entire day after remaining near high rsi wall the previous day (meaning it is in strong uptrend and is refusing to go down before another charge up)

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STBT any good stock near closing if

1) it has exahusted near upper rsi wall in the last few hours, or

2) it has just given a charge towards lower rsi wall (preferably after exhausting near upper rsi wall)

3) it has remained by and large within 35-65 range for the entire day after remaining near lower rsi wall the previous day (meaning it is in strong downtrend and is refusing to go up before another charge down)

----------------------------------

RSI is said to have exhausted if it has banged its head against the upper or lower wall a few times while the price was clearly trending.

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The same applies to nifty futures as well.

Also, obviously, only stock futures should be taken for btst or stbt for cost considerations.
The stock or nifty is likely to give you handsome profit in the morning. Due to global pressures, if the stock chosen as per above rules behaves adversely, it is most likely to rebound.

How to estimate price graph of the next day?

"Everyday is a new day" goes a saying.

This is not exactly true in stock market!

Every morning appears to be a fresh day but it is not so in reality.

In reality, it is the contiuation of the painting it was drawing the previous day, rather, since last few days.

The overnight global happenings only distort the picture with temporary hikes or dips.
.....

Just imagine you draw a long up and down snake on a paper from left to right end.

Now draw four vertical lines from top to bottom at equal distance on the paper, dividing it in 5 equal parts.

Each of this section represents one day's graphical movement.

The graph of every new day seems to be continuing more or less from where it had left yesterday!

The new day's graph is like another piece of the bigger jigsaw puzzle being added.

5-day intraday graph is the best tool to predict or estimate the likely movement of the price today!

Go to (http://www.google.com/finance?q=NSE:.NSEI), click on 5d and you will see what i am talking about.

Just remember, all price movements happen like waves, like a ball moves bouncing forward.

Just like the bouncing ball touches the ground at single point after some distance, each wave has to move on pencil heal bases! Expect and anticipate these pencil heal bases.

The continuation pattern of 5-day chart alongwith the anticipated touch-down points can estimate the price movement beautifully!

The price movement in the first 1-2 hours of the new day further confirms the estimation.

Also, increase the time period of the graph gradually from 5day to 1 month to 3 month to 6 month....and you will see the amazing continuity.

BTST at its rawest !!!

This is a powerful

High Success-rate

High return

High risk (Only for the brave hearts)

High Stress

Extremely Quick

BTST trading technique.

...

...
"Buy at 03.29pm one (or multiples thereof) futures lot of the stock
which satisfies the following conditions:-

1) is 1.5% to 3% in the plus,

2) ahead of nifty by atleast 1%

e.g. if nifty is 0.3% in the green, the stock should atleast be 1.3% in the green.
the technique works quite well even if nifty is in the red, but risk increases.

3) the sector (in which this stock falls) is atleast in the positive.

(preferably belongs to the best performing sector of the day which has shown day-long strength.)

4) the sector (in which this stock falls) is not showing a dead-cat-bounce

and sell in the first 60 seconds of opening of the market the next day!!!"

If it opens low due to "kneeling" of the stock by nifty, hold on as the stock most likely will fill the gap and bounce in the green. Keep stop loss at 1% of previous day closing....

...
If any of the above mentioned 4 conditions is violated, find the next stock in the waiting list which satisfies all of these conditions.

If none of the stock qualifies, don't trade that day.

Caution:-

Overnight disaster/unfavourable news in the local or world market may result into big gap opening which may result into substantial loss.

Such disasters happen rarely, but may happen.

Last time it happened was when Congress returned to power in May09 shocking everyone, trapping many who were short!

To overcome such a situation, I always ensure that I don't leverage much. Also, that I have enough funds at my disposal to hold on to such losing situations for long.

I never play with the money which I can't afford to lose in case of disasters.

Except for this eventuality or the error in picking the stock, I have found this technique more than 90% accurate.

It has helped me and many of my friends overcome huge loss backlogs.

Many have made huge huge money using this technique.

Many use this technique full-time.

This technique is very effective for those who are flush with funds and have huge backup (no doubt money attracts money!).

I must admit, whenever I use this technique, my stress level is rarely zero. Although I can't do anything (majority of the times I don't need to) but i can't help being glued to TV for latest news in the world markets. Sometimes, I have restless sleep.

The consolation is that the returns are shockingly high and quick.

The beauty of this technique is that

there is no monitoring required,

you are in the market for less than 90 seconds,

patience is not required (it is forced; u can't do anything till the markets open the next day!)

there is no stop loss.

it works in rising as well as falling market conditions!

This is BTST at its rawest!