BTST

Key Highlights

• It is a trading facility that enables investors to sell shares on the next trading day (T+1) after purchase, without waiting for the settlement cycle to complete (T+2).

• BTST is most suitable for active traders and short-term participants who track markets closely and are willing to take on higher risk for quick gains.

What is BTST (Buy Today, Sell Tomorrow)?

It is a trading facility that enables investors to sell shares on the next trading day (T+1) after purchase, without waiting for the settlement cycle to complete (T+2). It acts as a hybrid between intraday trading and delivery-based investing, giving market participants the flexibility to capture short-term opportunities arising from overnight price movements.

How BTST Operates?

• Purchase on Day 1 (T): An investor buys shares during market hours.

• Sale on Day 2 (T+1): The same shares can be sold the following day, even though they are not yet credited to the Demat account.

• Final Settlement (T+2): The exchange clearing system ensures smooth settlement of both buy and sell transactions on the standard cycle.

Key Advantages

• Opportunity to Capture Overnight Gains: Investors can benefit from favorable news flow, corporate announcements, or market sentiment shifts between two sessions.

• Efficient Use of Capital: Funds are not locked for long periods, improving liquidity for active traders.

• Flexibility Beyond Intraday: Unlike intraday trading, positions need not be squared off the same day.

Risks to Consider

• Short Delivery Risk: If the broker or clearing member cannot deliver the shares sold on T+1, it may result in auction penalties.

• Market Gap Risk: Prices can open significantly higher or lower the next day, exposing traders to volatility.

• Transaction Costs: Brokerage fees, STT, and other charges can impact net gains, especially on small margins.

Who Should Use BTST?

BTST is most suitable for active traders and short-term participants who track markets closely and are willing to take on higher risk for quick gains. It is generally not recommended for conservative or long-term investors, as the strategy is highly dependent on timing and market sentiment.