The strategy of Buy Today and Sell Tomorrow (BTST) and Sell Today and Buy Today (STBT) stocks is one of the most common among stock traders. I am even sure that most of you guys must be consulting moneycontrol forums and advisory for BTST/STBT picks. But, do you know that you yourself can identify these picks using certain parameters?
Well, today I will be showing you just that.
Before taking these calls, have a mindset in yourself that you will be trading within a narrow window of first or last 15-20 minutes of market opening or closing. This is because market witnesses maximum volatility in that time frame only.
The first and foremost criteria you should see while identifying a particular stock for BTST/STBT purposes is the volume. If the volume of that particular trading day is higher than 5- or 10-Day Average, consider it to be a great candidate for BTST/STBT.
Along with volume, the second metric which is useful for identifying BTST/STBT candidates is the Ask/Bid ratio. Bid ratio is for the Buyer (Price which the Buyer is willing to give) and Ask ratio is for the Seller (Price which the Seller is willing to give).
When the volume on the Bid ratio is at least 1.5 times higher than the Ask ratio, it is a potential BTST candidate.
If the Ask ratio is 1.5 times higher than Bid ratio, it is great STBT candidate.
This is one metric which should be noticed during the end of the trading day. If the stock price closes above the 13-Day Moving Average. It is positive sign and a great pick for a BTST stock.
If the stock closes below the 13-Day Moving Average it is a great pick for STBT.
The combination of the above 3 metrics helps me find a BTST stock or an STBT stock. There may be better combinations but for me this one has always worked.