What is BTST and how does it work? (2024)

FAQs

What is BTST and how does it work? ›

BTST stands for "Buy Today, Sell Tomorrow." It is a trading strategy used in the stock market. BTST trading is based on a simple premise: purchase shares on one day and sell them on the following day, ideally for a profit.

The biggest risk associated with BTST is short selling. These trades happen without shares actually settling in your account. If the seller defaults on the delivery of the stocks on time, you won't be able to meet your obligations as the seller. In such cases, you also face the risk of an auction penalty.

BTST stock market trading may be profitable if done correctly. It is important to note that the trader must be alert to any unexpected price changes in the equities they have picked.

A buy today, sell tomorrow (BTST) or intraday order is not allowed in the stock market for the following reasons. Scrip is categorised under the T2T category. The scrip is an illiquid commodity in the stock market, and its orders will most likely end in short delivery.

Intraday and BTST (Buy Today Sell Tomorrow) orders are blocked if the instrument is illiquid and it may be short-delivered. To learn more about short delivery, see What is short delivery and what are its consequences?

For Buy Today Sell Tomorrow (BTST) trades, a fee of Rs. 15 plus 18% GST will be levied for selling any scrip from the holding of any shares. If you buy and sell the next day, the shares will be received in your DP, hence the charges will be applicable.

Price breakouts in candlestick charts

The 15-minute candlestick trading chart showing the share's highs, lows, closing, and opening prices is an excellent tool to identify BTST stocks. The most price action happens during the last leg of the trading session after 2 pm when intraday traders start settling their trades.

Make use of the 15-minute candle day analysis

The 15-minute candle day analysis can help traders identify the right time to use the BTST trading strategy. As a trader, you must take note of the low and high of the first 15-minute body of the candle.

The best chart patterns for day trading include the triangle, flag, pennant, wedge, and bullish hammer chart patterns. How to find patterns in day trading? To identify chart patterns within the day, it is recommended to use timeframes up to one hour.

How much penalty for BTST? ›

An auction penalty is a sum the defaulter has to pay for the non-delivery of shares after selling them. The exchange conducts an auction and buys the shares in the auction market. The BTST penalty charges range from 0.5% to 1% and can go up to 20% of the short-delivered stock.

Swing trading and 'buy today and sell tomorrow (BTST)' are two short-term strategies that traders often use. There are several differences between these two trading strategies. Here's a closer look at a few of the key ones.

BTST Advantages

BTST trades do not attract Demat Debit Transaction Charges as shares are not credited in your Demat account. If you find intraday trading unprofitable, then BTST gives 1 more day to your trades to improve its performance.