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

FAQs

What is the best time to sell BTST stocks? ›

The best time to acquire BTST stocks is half to an hour before the market closes and then selling it the next day at the earliest.

Quick Profits: BTST trading allows you to make fast gains by taking advantage of overnight price changes in a short time. Avoid Overnight Costs: Unlike other trading methods, BTST involves selling your shares the next day, helping you avoid the costs tied to holding stocks overnight.

BTST stands for Buy Today, Sell Tomorrow. The Indian capital markets follow a T+1 settlement cycle. For instance, if a stock is purchased on Monday, it is delivered to the demat account on Tuesday. However, the stock can be sold even before it is received in the demat account.

The BTST trade strategy provides opportunities for quick gains within a short timeframe as traders leverage overnight price movements. In contrast to several trading methods, BTST trade involves selling your position the very next day. This helps eliminate costs associated with holding stocks overnight.

Here are some of the disadvantages of BTST trading: Limited Margin Facility: Unlike intraday trading, where traders can avail of margin facilities from brokers, BTST trading is usually done on a cash-and-carry basis. This means that traders must pay the entire trade cost upfront, limiting their margin capabilities.

Some traders follow something called the "10 a.m. rule." The stock market opens for trading at 9:30 a.m., and the time between 9:30 a.m. and 10 a.m. often has significant trading volume. Traders that follow the 10 a.m. rule think a stock's price trajectory is relatively set for the day by the end of that half-hour.

The following are some of the key advantages of the buy today, sell tomorrow strategy. It enables you to profit from the short-term volatility or rise/fall in stock prices. Since shares do not get credited to your demat account, BTST trades are exempt from Demat Debit Transaction Fees.

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. You can be charged up to 20 per cent of the value of the short-sold shares.

Which is better intraday or BTST? ›

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.

You can buy the same stock back at any time, and this has no bearing on the sale you have made for profit. Rules only dictate that you pay taxes on any profit you make from assets.

But keep in mind, the price will increase only if bank nifty index moves in your favor. Price will decrease if Bank nifty index moves against your favor or even if it is in same range because of premium decay. Definitely we can buy call option (CE) today and sell tomorrow, except if it is not the weekly expiry.

If you don't sell too early, you'll sell too late. To lock in solid gains, sell while your stock is still going up. As IBD founder William J. O'Neil has said, "Your objective is to make and take significant gains and not get excited, optimistic, greedy, or emotionally carried away as your stock's advance gets stronger.

The 11 a.m. trading rule is a general guideline used by traders based on historical observations throughout trading history. It stipulates that if there has not been a trend reversal by 11 a.m. EST, the chance that an important reversal will occur becomes smaller during the rest of the trading day.

So just to quickly summarise:

If you're looking for the best time to either buy or sell a stock during the trading day it is; During the last 10-15 minutes before market close. Or about an hour after the market opens.