Among traders, BTST trading is the most common choice, Creating a database of shares or communities is a must for any trader, regardless of the type of trading they choose to do.
After creating, the database keep an eye on those shares for a week or two. Try to find any shares that have the ability to go up by 5-10% in a matter of days or weeks.
Table of Contents
What is BTST Trading?
Btst meaning is Buy Today, Sell Tomorrow. BTST means an approach that enables investors to sell shares before they are transferred to a demat account or delivered. In two days, a trade should be completed.
So btst full form is Buy today sell tomorrow whereas some call it ATST which means Acquire Today, Sell Tomorrow. STBT stands for Sell Today, Buy Tomorrow, which is the inverse of BTST trade.
Uses of BTST Trading
In a typical equity distribution trade (buying/selling shares through a CNC order), the exchange takes T+2 days to conclude where T is the business day. In T+2 days, the investor receives stocks in his demat account, and the seller receives money.
Example of BTST Trade Means
If you buy any stock on Tuesday, the stock will be transferred to your demat account on Thursday. Vacations in exchanges are not counted when calculating T+2 days. As a result, if there is a break in between, the delivery time will be increased.
What if you had the chance to book gains or losses in the time between those two days? Since it’s a regular order, you won’t be able to take advantage of this chance. The trader can suffer losses as a result of this.
BTST helps customers fix this issue by enabling them to buy or sell shares before they are transferred to their demat account. This allows traders to profit from stock price fluctuations.
How to do BTST trade?
- Follow the firm’s or associated sector’s news.
- Keep track of the share’s or associated sector’s forthcoming events
- Examine the firm’s fundamentals, such as historical trading histories or shareholding trends, among other things.
- Try to do BTST in large cap or nifty 50 shares so that if you don’t get a boost, you can at least exit the role without losing money.
- Keep your stop loss and benefit booking points in mind for a quick and timely exit.
- To get a stronger entry point, practice several market chart studies.
- To learn about the stock, buy a small quantity at first.
Advantage
- You can keep the stock for a longer period if it doesn’t perform in the next few days.
- Risk of loss is near to zero if you choose good stocks.
- You will get the dividend & other benefits as well if you keep the stock for more than 2 days before the record date.
Disadvantage
- Many stock brokers do not give margin to the BTST service, unlike intraday trading. Since these are cash & carry orders, the client must pay the entire cost.
- Sometimes there will be extra charges than normal brokerage charges while you sell the trade on the next day. Sometimes it can go up to 20% of the stock value. However, it is a rare chance.
Examples of btst trade
Here are the best examples of btst trade
Example 1
Let’s pretend you bought 100 shares of BTST today from NSE and sold them the next day. What if the individual who sold you 100 shares didn’t deliver them to you because of some unforeseen circumstance?
Of course, the trade would have a negative impact on him. The stocks will be auctioned at the exchange, and the individual will be fined up to 20% of the cost of the stocks Your stocks will be credited the next day, i.e. T+3.
Example 2
Suppose you bought the BTST stocks on Monday and sold them an hour later on the same day. You’ll receive your purchased shares on Wednesday, and you’ll have to deliver your sold stock on the same day.
You will not be able to deliver the stock if you have a short delivery, and you will be penalized by the exchange. As a consequence, BTST can lead to fines in some cases.
BTST Trading vs Long-term Investing
Here are the major Difference Between Different BTST Trading and Long Term:
| BTST |
Long-term |
|---|---|
| The BTST service is a delivery order addition. It comes with perks that aren’t available with regular delivery orders. | On T+2 periods, delivery orders lead in the delivery of stocks in the demat account. |
| Zerodha provides brokerage-free delivery transactions, which is the similar as delivery brokerage. | The transaction fee is the same as the delivery fee. |
| The liquidity offered is identical to that of distribution trades. In almost every event, no margin is given. | There isn’t any flexibility. |
| There’s a greater chance that the person you bought the stock from won’t produce it. | Low risk because the shares are actually in your control when you sell them. |
BTST vs Day Trading
Here are the major Difference Between Different BTST Trading and Day Trading:
| BTST | day Trading |
|---|---|
| In BTST, you can sell your shares the same day or the next day. | You must sell the stocks on the same day as the order is placed or change the transaction to a delivery trade in intraday trading. |
| Without being delivered to the demat account, the buyer has two days to settle the deal. | The trader only has one business day to complete the transaction. |
| It does not have an extra margin (no leverage). | For intraday trading, greater margins are available. The margin offered by the broker ranges from 5x to 50x. |
| There’s a greater chance that the person you bought the stock from won’t produce it. | Since buying and selling take place on the same day, there is no chance of a late delivery. |
BTST Trade Charges
- Fees for BTST Trade on the Same Day
In this situation, your transaction will be regarded as an intraday trade, and you will be charged brokerage fees for intraday trading. - Charges for BTST on a T+1 or T+2 day sell
In these situations, brokerage fees for equity distribution are relevant. it is to mention Zerodha provides brokerage-free stock delivery, which means you will not be charged a brokerage fee for these BTST transactions.
Note:
Notice that based on your brokerage plan and the day you sell the stocks some stock brokers can demand specific BTST brokerage fees. Before putting a BTST order, please consult with your stock broker.
STBT Charges
Sell Today and Buy Tomorrow is abbreviated as STBT. It’s the inverse of BTST (shares are sold first, then bought), and it functions in the same way.
While no Indian brokers provide shorting in delivery trading, none of them offer STBT. Intraday trading allows for shorting.
You can sell shares today and buy them back tomorrow if you have them in your demat account. You can’t do STBT unless you have shares in a demat account.
Is BTST trading good?
Demat Debit Transaction Charges are not applied to BTST trades because stocks are not credited to your demat account. If you discover intra-day trading to be unsuccessful, BTST will allow your trades two extra days to enhance their success.
Is BTST trading risky?
If the seller fails to deliver the securities, i.e., if there is a short delivery, your commitment as a seller to provide shares will be breached, and you will be subject to an auction charge of up to 20% of the worth of the equity short delivered.
Conclusion
BTST Trading requires a huge amount of practice and experience. However, You can make a proper strategy to overcome from wrong trades.
This is all from our side regarding what is btst trade. Let us know your views in the comment section.
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FAQ
Is BTST trading is allowed in Zerodha?
Yes, You can do BTST trading in Zerodha without any issues.
What is Relation between STBT & BTST?
STBT is Sell today and Buy Tomorrow and It is Inverse of BTST (Buy today and sell tomorrow).
Can we place BTST order in kite?
Yes, You can place the BTST order in Kite same as a delivery order.
Do there is any penalty on doing BTST?
Yes, There is penalty in cases of short delivery which is up to 20% of the total trade. However, it happens in rare cases.
Full form of BTST trading?
Full form of BTST is Buy today and sell tomorrow.
