BTST with 5-Day Holding Period for 5% to 10% Profit

How the Strategy Works

Stock Selection : Focus on stocks with strong fundamentals and positive technical indicators like upward trends, breakout patterns, or high trading volumes.Prioritize sectors or stocks showing strong momentum or favorable news.

Entry Point : Identify the right buying opportunity based on technical signals like support levels, RSI, or moving averages.Enter when the stock shows signs of upward momentum.

Benefits of the BTST (Buy Today, Sell Tomorrow) Strategy

Quick Profit Potential :The BTST strategy enables traders to capitalize on short-term price movements, achieving gains within 1 to 5 days.

No Delivery Charges :Since BTST involves buying today and selling before settlement, many brokers waive delivery fees, reducing transaction costs.

Leverages Market Momentum :Ideal for taking advantage of sudden market news, trends, or technical breakouts without long-term commitment.

Lower Risk Exposure :By holding stocks for a limited time, traders reduce exposure to long-term market volatility.

Liquidity Maintenance :Quick exits ensure funds remain available for other trading opportunities.

To calculate quantity and collective risk for a BTST strategy with a 5-day holding period, aiming for 5-10% profit while limiting your stop-loss to ₹1,000 per trade, follow these steps:

Steps for Calculation

1. Define Risk Per Trade

• Maximum Risk: ₹1,000

This is the amount you are willing to lose in case the trade moves against you.

2. Determine Stop-Loss

• Stop-loss is the price level where you exit the trade to limit losses.

• Calculate the stop-loss range (entry price - stop-loss price).

3. Calculate Quantity Use the formula:

Quantity = Risk Per Trade / Stop-Loss Per Share

4. Example Calculation

Assume the following:
• Stock Price: ₹500 per share (entry price)

• Stop-Loss Range: ₹490 (₹500 - ₹490 = ₹10 stop-loss per share)

Now calculate the quantity: Quantity = ₹1,000 / ₹10 = 100 shares

5. Collective Risk

• If you are taking multiple trades, the collective risk is the total of all stop-loss amounts across trades.

• Example: If you take 3 trades with a ₹1,000 stop-loss each, your collective risk is ₹3,000 (₹1,000 × 3).

Potential Profit Calculation

If the stock price increases by 5% to ₹525:

• Profit per share = ₹525 - ₹500 = ₹25
• Total profit = ₹25 × 100 shares = ₹2,500

If the stock price increases by 10% to ₹550:

• Profit per share = ₹550 - ₹500 = ₹50
• Total profit = ₹50 × 100 shares = ₹5,000

Key Takeaways

• Quantity: Determined by dividing the fixed risk (₹1,000) by the stop-loss per share.

• Risk Management: Stick to your stop-loss to limit losses.

• Profit Target: Achieving a 5-10% gain can result in ₹2,500-₹5,000 profit in this scenario.

Always monitor the market and keep on stoploss and target based on stock volatility and market conditions.