In this post, we will be looking at a BTST Volume Breakout Strategy, and how we can get 2-3% gains with the help of it. Here we will not only look at potential entry points but also exit points for maximum gain.
BTST means Buy Today Sell Tomorrow, where you buy ½-1 hour before market close and sell on the next day at the earliest.
This BTST trading strategy will focus on correct entry using volume breakouts. As shown in the figure below, it can result in pretty good gains if applied properly.
To find those potential entry points, lets start by enabling Auto-Support/Resistance by right-click-ing on the chart and then selecting “Enable Auto-SR”. Then select “Auto-SR Options”. Then select “Auto-SR Based on Current Cursor” so that the Auto-SR lines are dynamically drawn based on where the current cursor is (i.e. using the past 240 bars exclusive of current cursor). This is a great way to visually backtest Auto-Support/Resistance and related features. Also ensure that “Enable Auto-SR Zones” are enabled in this menu.
As we can see in the screenshot below, DHFL did a volume breakout around 3:15 pm of a very strong Auto-Supply Zone (as shown by the red zone in the chart below), and that too on above average volume.
But not every volume breakout can result in such gains. To ensure that our BTST trading strategy is successful, we need to ensure that there is a sideways trend for at least 1-2 days prior to the breakout, as shown in the screenshot below:
Now, we need to find out how to exit, and we can do that by using “Create Custom Scan” button, to create a custom scan based on “Chandelier Exit” as shown in the screenshot below:
Once the scan is created, the custom scan results will show up in the left. But, what we want to do is to apply these signals on the chart, and that can be done by clicking on the Buy/Sell signals button and setting the signal as follows:
After we click on “Save” button, the orange sell signals will show up in the chart and if we were to sell it on the closing price of that signal, we would get a 4.2% gain as shown below:
Now to find out how to identify BTST stocks using this BTST trading strategy, we can turn our eyes on another custom scan which is created as follows:
We can right click on any group, say NIFTY500, and right click and “Set Scan Alert”.
Once we do that, the scan alerts are set based on auto-sr based volume breakout scan. If we monitor the scan alerts in the software, we get pop-up and sound scan alerts as shown in the screenshot below.
If we click on any symbol in the scan alert window, e.g., VMART, we can see that it captured the breakout at 3:14 pm correctly.
We can also get notifications of these scan alerts in the Investar Android App, by clicking on the button at the top right of the software as shown below:
Hope this blog post helped you to learn a BTST trading strategy with specific steps on how to select BTST stocks for BTST trading.