How to trade in BTST and STBT stocks?

BTST (Buy Today Sell Tomorrow) and STBT (Sell Today Buy Tomorrow) are the terms used in the share market. Traders are always on a lookout for opportunities to make more money in the market. The decision to sale/purchase the stock is driven by its fundamental and technical strength. The confidence of the trader also plays a crucial role in it.

BTST and STBT stocks

What is BTST?

It is a short-term opportunity wherein the trader purchases share today in cash or F&O segment and sell it the next day. The trader does not hold long positions. This BTST position is taken by a trader in those stocks which are expected to trade at a higher price tomorrow.

What is STBT?

It is also a short-term opportunity wherein the trader sells the stock today in an F&O segment and purchases back the next day. This is not possible in the equity segment of the stock market. This position is taken by the trader in those stocks which are expected to sell at a lower price tomorrow.

Difference between BTST/STBT and intraday trading

BTST/STBT is different from intraday trading. In BTST/STBT stocks are purchased/sold on one day and sold/purchased another day. In intraday stocks are purchased and sold on the same day.

How to trade in BTST and STBT?

The first and the foremost on sees is the break out in the direction either way during marketing hours. Say a share of a company is trading around 1000 during the day. In a day at around 3:00 pm, it rises suddenly to around 1020 which suggest a breakout in the price moving pattern the trader purchases share today and sell tomorrow at a higher price.

On the reverse, if the stock breakdown is in the downward direction that is from 1000 to 980 at 3:00 pm STBT position is taken by the trader in the F&O segment.

Risk traders take in BTST/STBT position

Everyone knows the stock market is a risky business and traders must be careful while taking BTST/STBT position. If the trader makes a wrong interpretation of the price movement the trader has to bear the loss. The market movements are highly unpredictable; it can move against expectation and will leave no option to book loss.

Trading tips and strategies

Strategies for BTST and STBT are highly attractive on returns but one must be careful while trading. It is advisable to have a stop loss in place. One must not trade in BTST and STBT when the stock market is very volatile or some major events are expected to happen overnight. Like RBI policy declaration, company results, change in government policy or rules, election results, etc. Trading is an art and requires skill and knowledge which is acquired with time. It is advised to invest your surplus money in the stock market so that in case anything goes wrong it will not affect your financial standing.

It is better to take tips from an experienced person or companies like Alliance Research to make good money and create wealth.

How to Gain More Profit From Intraday Trading?

Buying and selling of stocks within the same trading day is called intraday trading or day trading. Stocks are traded at stock exchange during trading hours which is predetermined by the exchange. In intraday trading stocks are bought or sold in huge numbers with only one intention, which is, booking profit within a day. Stocks that are purchased are not intended for investment, while the trader earns in anticipation of the stock indices to a move north before he offloads his stock.

Intraday Trading

Usually, the online account is used for purpose of intraday trading. In intraday trading, the trader has to specify that the order he/she is placing is for intraday trading. Since the orders are squared off before the end of the trading session it is called intraday trading.

A few points are discussed below that you should keep in mind while trading in intraday trading.

  1. Intraday trading is risky

Intraday trading is riskier than investing in the regular stock market as there is a time bounding that one has to sell before close whatever be the market condition that day. Beginners should understand the basic of intraday trading to avoid loss.  Intraday trading is better for experienced traders. Always remember to use the capital for trading which you can afford to lose or that you have as a surplus because in case of loss, you should not face financial difficulties. Intraday tips from Alliance Research will help you learn the art of trading faster.

  1. Using intraday indicators to gain more

One has to do a lot of research when it comes to booking profits in intraday trading and indicators help you out for the same. Intraday tips from the experienced traders come as a blessing in disguise. The indicators are the beneficial tool which should be used with a widespread and prevalent strategy so as to maximize returns.

  1. Risk management in intraday trading

Trading in the stock market has an inherent with risk which all intraday traders have to face. Daily volume of shares traded and price volatility are the additional factors that intraday traders have to face when they pick the stocks. It is advisable not to risk over two percent of their total capital on a single trade so as to manage risk appropriately.

  1. Using one-day interval charts

Daily charts are the charts used by most intraday traders. These charts depict price movements of a share of companies on a one-day interval. Reading charts is a popular technique that helps illustrate the price moments between the opening and closing of the daily trading session. There are various charts which help intraday traders like 2 minute, 5 minute, and 15 minute. These charts are candlestick or bar charts which represent the opening, closing, high and low for the given time interval. Along with this traded volume is also represented.

  1. Picking relevant stocks for intraday trading

Picking stocks for intraday and long-term are two different aspects and the intraday trader should know the difference. Many people are unable to make the profit because they do not select appropriate stock. Choosing the right stock, at right time and at the right price is an art that day trader learns through experience.

We provide tips for choosing the right stock, at the right time, for a right price for buying and/or selling. You can contact us or fill out our inquiry form and we will communicate with you.

MCX Trading – A Good Investment Option to Better Return

As BSE or NSE shares of the companies are traded similarly at MCX (Multi Commodity Exchange) or NCDEX (National Commodity and Derivative Exchange) commodities are traded. MCX was set up in Nov. 2003 under FMC which was merged with SEBI and now comes under the regulatory preview of SEBI.

mcx trading

One can start commodity trading with a low amount as INR 5000/-. Since you will be investing your time and capital it is better to start with around INR 50,000/- in your pocket. It is a sufficient amount for beginners to start trading. Before we move further let me tell you not to trade with borrowed money, trade with the surplus amount so that even if you lose it should not make any dent in your financial standing. Remember that your invested capital will be at risk and there is no guarantee that you will only profit from it.

Investing in commodities without understanding is a risk and a bad idea to lose hard earned money. So first understand what commodities are and how they work.

Commodities markets throughout the world are the foundation of the global trade system. Profits can be made if the trader has a good knowledge of the issues that drive commodity prices and understands the underlining facts how one should trade on it.

A commodity is a raw material or basic goods that individual or institution buy and sell. They are the foundation blocks for more complex goods or services.

A commodity trade takes place either in the spot market or futures market. As the name implies, in spot market trade is in exchange for cash or commodities and happens immediately. In futures, market trade is based on standardized contract. It is not necessary to accept deliveries of goods. Trade happens in electronically and contracts can be settled in cash.

Generally speaking, commodities can be divided into four categories and are further subdivided. The categories are agriculture, metals, energy and environmental.

Agriculture includes food crops (cotton, soya beans, corn, etc.), livestock (pork bellies, hog, cattle, etc.), and industrial crops (wool, lumber, rubber, etc.).

Metals include precious metals (gold, silver, platinum, etc.), base metals (iron, aluminum, copper, nickel, steel, lead, zinc, etc.)

Energy includes petroleum products (crude oil, heating oil etc.), natural gas, uranium, ethanol, electricity, etc.

Environmental includes renewable energy certificates, carbon emissions, mining, etc.

As with any other investment options, commodity market also carries risk. To reduce and spread risk it is better to invest in various commodities in the same category, that is diversification of your portfolio. If you get right guidance and accurate tips from the experienced analyst you are bound to gain. It should be noted that stock and commodity market function differently. In commodities, there is a lot which one buys, no such thing in the stock market.

It should be noted that MCX has higher volume compared to NCDEX. MCX specializes in precious metals; NCDEX specializes in agriculture and other categories. Online trading can be done on both the exchanges. Your trades can be accessed on laptop, computers, and smartphones. That is you can trade from anywhere, from home, office, during your journey or on a holiday. The transactions are seamless and the complete process of transfer of funds without any error and within a short duration.

To avail tips on commodity trading, you can contact us or fill out the online form…. Happy Trading…..

Do you know earnings from stock market depend on your approach?

In lure of big money people are attracted to share market but let me caution you making money in stock market is not easy. It requires a lot of patience, a disciplined approach, sound research, and analysis apart from many other factors.

National-Stock-Exchange

The stock market is volatile and this has confused a lot of investors and traders alike. They are in confusion, should they buy, sell or hold on to the equity. There is no sure shot formula to succeed in the stock market, but there are few unsaid golden rules that will increase the chances of getting good returns.

Research before you invest

One should conduct proper research before investing in stocks and in actual practice, it is rarely done. Investors look for the name and brand of the company. Some have a preference only for particular industry or sector or brand and that is not the right way to put your money.

Only invest in the businesses that you have some knowledge about

Never invest simply in a stock instead invest in the business. When you buy shares you are a part owner of the company. So before you invest you should know what the company’s business is.

Never ever try to time the market

The stock market is highly unpredictable even Warren Buffett does not try to time the market, he does have his view about the price level an individual share can go (upside or downside). Majority of investors just do the opposite.

Avoid following the leader blindly

Usually, it is seen that the investor his highly influenced by his family members, friends, colleagues or acquaintance while investing in shares. Did they conduct an analysis before coming to the conclusion what to buy and what not to buy? Another tendency is to buy those shares that everyone around is buying, following the herd mentality. This strategy is sure to backfire. In Warren Buffett words: “be fearful when others are greedy and be greedy when others are fearful”.

Your strategy should have a disciplined approach

Volatility is a part and parcel of every stock market. It is seen that even in bull runs there are bouts of panic moments. In this volatility, many investors lose money even in bull runs. There should be a systematic and disciplined approach for generating good returns. Calculate out at what price you wish to buy shares and at what price you wish to sell them until then hold on to it.

Let not emotions come your way

Do not be carried away with your greed or fear emotions. Investors lose money because of their inability to control their emotions. The stock market is not the game for speculation. Analysis and proper calculations will create wealth for you; use your brain instead of your heart.

Let your portfolio be sufficiently broad

Diversification is the key to reduce your risk. Diversify your folio across different asset classes. This diversification depends upon your risk taking capacity. Also do not over diversify.

In case you need any help or have any queries regarding which stocks which should be bought or sold you can contact us and we will be glad to help you out.

Should you buy shares issued at the premium price?

The shares available in Indian share market of any company have a par value or Face Value (FV). The face value of shares is usually Rs. 1, Rs. 2, Rs. 5, Rs. 10 etc. The FV has to be a positive integer whole number. It cannot have a fractional value like Rs. 1.50 or Rs. 2.25. The shares which are issued in the market are usually issued at a premium price.

premium shares

Let us take an example to understand what shares issued/offered at premium price means.

ABC Company’s share has a face value of Rs. 2 per share. During its public launching (IPO) the company decides to issue shares at Rs. 50 per share in the market. The shares are issued at a premium. That is more than its face value. You can calculate the premium thus.

Premium per share = issue price – face value

As per our example of ABC Company, the premium per share can be calculated as follows

Premium per share = 50 (Issue price) – 2 (face value) = 48

In other words, the face value per share is Rs. 2, Premium is Rs. 48, and the issue price is Rs. 50.

Let us go deeper to understand the concept of why companies issue shares on the premium price and not the face value.

Equity financing

When any company plans for expansion or additions to the existing line of business and grow big the individual owners or partners require funds or the company requires funds for further modernization and expansion. They can get funds through banks, NBFI, or the general public or it can raise funds through equity route or debit route.

When the promoters take the equity route that is called equity financing, the company or its promoters sell a portion of their holding to the public. The number of shares which can be issued to the public is limited by authorized capital. AC is the capital that can be raised which is a total number of shares multiplied by its face value. The authorized capital is mentioned in the company’s MoA (Memorandum of Association). MoA is prepared by the company at the time of its registration and is a legal document which has to be submitted to SEBI (Securities and Exchange Board of India) along with other documents.

It should be noted that the company cannot issue more shares than the number indicated in its MoA. It can raise more capital by issuing shares at a premium.

The reason why the shares are issued at a premium

As stated above the company needs cash for the modernization and expansion plans of its business. As the company wishes to go public that is promoters are ready to dilute their shareholding. Since the company is in businesses for the last several years it develops goodwill among the public, an established brand of product, and a reputation in its line of business earning sufficient profit. When it issues shares at a premium it has two advantages, firstly short term that is higher the premium, less is the number of shares that it has to issue in the market and promoters holding remains higher. Secondly, the long-term benefit is that if shares issued are less the dividend per share is higher. In other words, the existing shareholders will get a better dividend yield. Since promoters’ holding percentage is more, a number of shares held by them are more and they get a larger share of the dividend.

If the premium is higher it has twin advantage for the company and its promoters. They are able to generate the required capital for their expansion plan and holding a larger portion of shares of the company. In future, they can buy-back shares from the public to further strengthen their hold on the company.

It is seen from time to time the company buy-back its shares from the share market when the promoters feel that the share price is undervalued in the market and increase their holding. Promoters know the functioning of the company so they buy their undervalued shares and when in future their share price increases they sell it and book profit. On the other hand just to fool investors and drive up the share price of their company the promoters go in for a buy-back.

If you are undecided that shares should be purchased at the premium price they are offered at or not, you can contact us and we will be glad to solve your query.