BTST Trade Meaning: How Buy Today Sell Tomorrow Works in India

What is your preference when it comes to trading? Well, this is one of the most common questions that you must have come across when you start trading. With so many types of trading in the stock market, it is quite important that you find the one strategy that works for you the best. 

Where some people prefer to go for long trades, there are others who prefer short trades like intraday trading. But there is one trading format that is quite popular among the traders, which is known as the BTST trade.

So, what is a BTST trade, and why does it stand out? Well, if you are new to trading and are looking for the answers, then read this guide and explore everything you need. 

What Is a BTST Trade?

BTST means Buy Today Sell Tomorrow. It is a short-term trading style recognized by SEBI. It is one in which you buy shares on one day and sell them the next day before they are delivered to your demat account. The aim is to help you benefit from the price changes, and that too in less time.

Now, the stocks and shares are sold before the T+2 settlement completes. This allows you to take advantage of early price changes without waiting for delivery. Traders use BTST when they expect a quick upward move in the stock the next day.

How To Do a BTST Trade?

It is clear that BTST is a short-term trading strategy. But now the question here is how to do a BTST trade in reality? Well, this is quite simple when you follow the proper steps and process. So, here is how you can do the same:

1. Choose a Stock for BTST

Start by picking a stock. Ensure that this is the one that shows signs of a possible rise the next day. You can use analytical and technical analysis with some charts and patterns to identify the same. Go through the news for a clear idea. The goal is to enter only when you see a clear short-term opportunity.

2. Place the Buy Order on Day 1

During market hours, you place a delivery buy order. Once executed, the shares move into the T+2 settlement cycle. They appear in your positions but are not yet delivered to your demat account.

3. Hold the Stock Overnight

After buying, you keep the stock in your account overnight. It stays under pending delivery. There is no extra action needed here. You simply wait to see how the market reacts the next morning.

4. Track the Price Movement on Day 2

On the next trading day, you watch how the stock performs. Now, if the trade opens at a higher value, then the BTST setup is positive. If the price weakens, you decide whether to exit quickly or wait for a slight recovery.

5. Sell the Shares on Day 2

If the price is favorable, you sell the stock on Day 2 itself. This is the main feature of BTST. You sell even before the shares are credited to your demat account. Your broker records the sale in the system.

6. Settlement Process in the Background

This is something that is handled by a stock broker. The shares bought on Day 1 get delivered to your broker. These shares will now be used by the broker. This will help them to complete the sale order from Day 2. This happens in the backend.

7. Profit or Loss Is Updated in Your Account

Once the settlement finishes, your final gain or loss is reflected in your trading ledger. If the selling price is higher than the buying price, you book a profit after charges. If not, then you will end up making the losses.

BTST Trades Stratgies

Various BTST trade strategies are actually based on the type as well. The table below shares quick information on the most common strategies and when you should be using them:

Advantages of BTST Trading

BTST trades allow you to earn profit from short-term trades with no wait for deliveries. Based on this, the main advantages of using the BTST trades are as follows:

• Better profits by capturing small price movements.

• No need to wait for the T+2 settlement cycle.

• Reduced market exposure.

• Shorter holding period.

• Good for momentum-driven stocks.

• Works just like the normal buying and selling of stocks. 

Risks of BTST Trading

Just like every other trade, BTST also carries risk due to factors like news, global cues, or volatility. The key risk points to know are:

• Gaps can lead to losses.

• Short delivery issues can exist.

• High vitality can impact the reversal movement.

• Positive news may fade the next day.

• Charges can reduce overall profits.

BTST vs Intraday Trading

BTST and intraday are great forms of trading plans to go for. Both are short-term but different. Here are the key points of difference to know:

Conclusion

BTST trading is a simple way to benefit from short-term price movements. You buy today, sell tomorrow, and try to capture early momentum. This is quite useful if you are looking to make profits from quick market movements. But this is possible when you have expert guidance and support. So, for smarter decisions and expert support, explore more guides and insights on Rupeezy.

FAQs

What is BTST in stock trading?

BTST means Buy Today Sell Tomorrow. You buy shares one day and sell the next before they hit your demat account. 

Is BTST allowed in India?

Yes, BTST is allowed in India. You must check if the broker offers this, and you can opt for BTST trades. 

Can beginners try BTST?

Yes, beginners can try BTST if they understand basic price movement. It is easier than intraday but still carries risk.

Does BTST have extra charges?

There are no special BTST charges. Regular brokerage, STT, GST, and exchange charges apply on both buy and sell.

Is BTST safer than intraday?

BTST is less stressful and needs less monitoring, but it carries overnight gap risk. Intraday avoids overnight risk but is more volatile.