BTST Stocks for the Day: 28-Feb-2025
Buy Today, Sell Tomorrow (BTST) trading is a method that lets traders sell stocks before they are delivered to their Demat account. This approach skips the standard settlement cycle and offers benefits like improved liquidity, lower costs, and chances to profit from short-term price changes.
At 5paisa, our analysts provide trading ideas tailored to different strategies. Each morning, we offer the best momentum stocks to buy today, while in the last trading hour, we share actionable BTST (Buy Today, Sell Tomorrow) ideas to help you make informed trading decisions.
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What is BTST Trading?
BTST, or Buy Today, Sell Tomorrow, allows traders to sell shares before they are credited to their Demat account. In the T+2 settlement system, stocks bought on a particular day are credited two trading days later. BTST enables traders to sell these shares the next day, leveraging short-term price movements without waiting for settlement.
How Does BTST Work?
To understand BTST better, let’s consider an example:
- Buying: You purchase 5 shares of L&T on Monday at ₹4,000 each, totaling ₹20,000.
- Selling: On Tuesday, before the shares are credited to your Demat account, you sell them at ₹4,100 each, earning ₹20,500 in total. This gives you a profit of ₹500 within a day.
- Settlement: Although the shares are scheduled to be delivered to your account on Wednesday as per the T+2 settlement cycle, your broker facilitates their delivery when you sell them on Tuesday. Additionally, 80% of the sale proceeds can be reinvested immediately, while the remaining amount becomes available by Thursday after the settlement is complete.
This process allows you to take advantage of short-term price movements without waiting for the shares to be credited to your account.
Is There a Risk to Executing BTST Trades?
BTST trades carry certain risks that traders should be aware of. One of the primary risks is short delivery, where the seller you purchased the shares from fails to deliver them by the settlement date. In such cases, the exchange conducts an auction to acquire the shares, and you may need to pay a short delivery penalty. This penalty depends on price movement and liquidity, and it can range from 1-2% to as high as 20% of the transaction value. Additionally, BTST is susceptible to market volatility, and unexpected price drops can lead to losses. Traders must carefully evaluate these risks before engaging in BTST trading.
What are the Advantages of BTST Trading?
BTST trading offers several benefits:
- It allows you to profit from anticipated price increases without waiting for Demat settlement.
- It provides two days to finalize agreements before shares are credited.
- No Demat transaction fees are charged, as shares are not delivered to the Demat account.
- You may pay lower transaction fees compared to traditional trades.
- It enables reinvestment of up to 80% of sale proceeds immediately.
- It offers an extra day to capitalize on market movements compared to intraday trading.
BTST trading can be a profitable strategy for capturing short-term price movements, especially when traders anticipate a breakout on the next trading day. However, staying alert to market changes and managing risks effectively is crucial.
Stock trading, much like a game of chess, requires traders to make strategic moves with precision and foresight. BTST trading has garnered attention for its potential to generate profits quickly while offering many benefits. However, like any trading strategy, it comes with its own set of risks. Traders, especially those new to the market, should take time to understand stock movements and market trends before engaging in BTST trading.
Seeking guidance from experienced professionals or conducting thorough research can help mitigate risks and maximize the chances of success in this dynamic trading approach.
FAQs
Find answers to frequently asked questions to help you understand our platform better.
BTST typically refers to buying stocks today and selling them the next trading day. However, if you choose to sell BTST stocks on the same day, it will be considered intraday trading.
Trade to trade stocks and stocks under GSM or ASM are not allowed for BTST trading.
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.
The risk with BTST buy-sell transactions is that because you are selling stock that is not yet in your Demat account, you depend on the seller from whom you purchased the shares to deliver the stock. If the seller fails to deliver the shares, i.e., your commitment to give shares breaks due to the short delivery, you will suffer an auction penalty of up to 20% of the short-delivered stock value.
Price increases toward the end of a trading session can result from the market's knee-jerk reaction and might not be sustainable in the next session. As BTST buy-sell trading occurs in the cash sector, brokers do not provide the same margin facilities to traders as they do for intraday trading.
SEBI has revised the BTST regulation since 2020. Before completing a BTST deal, traders must pay a 40 per cent margin. If the seller does not deliver the stocks on schedule, the short seller may face a penalty. The shares will be auctioned off to you by the exchange. Because the entire procedure lengthens delivery time, you will be penalised if you fail to deliver products to the final customer.
The following are some tested BTST trading strategies.
1. Establish a stop-loss.
2. Invest ahead of a Major Event.
3. Use the 15-minute candle day analysis.
4. Invest in high-liquidity stocks.
5. Book profits after attaining goals.