Herein, we share the meaning of the terms BTST and STBT used in the Stock Market. As an investor and trader, you should understand these terms (products) and use them only if they suit your needs.
BTST (Buy Today, Sell Tomorrow) comes as a facility that allows customers to sell shares before they are delivered into your Demat account.
This decision needs to be made in two days.
This facility (Buy Today, Sell Tomorrow) is also known as ATST or Acquire Today, Sell Tomorrow.
Nowadays, the BTST facility is offered by most of the stockbrokers that function in India, such as ICICIdirect, HDFC Securities, Zerodha, etc.
The reverse of BTST facility is known as STBT, i.e., Sell Today, Buy Tomorrow.
Let’s get into the details.
What is BTST (Buy Today and Sell Tomorrow)?
In the case of normal equity delivery trade (buying or selling of stocks using CNC order (Cash N Carry)), the transaction gets completed in T+2 days. Here “T” stands for the day of trading. The buyer gets the delivery of the shares in his Demat account, whereas the seller gets money in T+2 days.
For example, suppose you buy some shares of a company on Monday. In that case, it will be credited to your Demat account on Wednesday.
This is the case in normal order.
However, you can even book the profits or losses in between those two days.
Here, comes the role of Buy Today, Sell Tomorrow, which allows traders to buy or sell their securities before these are delivered to their Demat account.
So, BTST allows traders to benefit from short-term volatility in the pricing of the stocks.
How can you make BTST trades with a broker?
To make BTST trades, you need to buy the stock using the CNC product type and sell the stock using the CNC product type on the next day.
Your broker will take care of these transactions in the background. Moreover, you need not choose any special order type or follow complex steps for using the BTST facility. There is even no need for taking special permissions or approvals for using this facility.
However, it should be noted that Buy Today, Sell Tomorrow trades are not allowed on:
- Trade to Trade Stocks
- Stocks under GSM (Graded Surveillance Measures)
- Stocks under ASM (Additional Surveillance Measures)
Here, we have featured some of the main features of BTST Trades:
- BTST trades allow you to sell a share before it is delivered to your Demat account. It can be done within two trading days after the buy order. On the third day, the shares get credited to your Demat account. After that, you can place a normal sell transaction.
- BTST is a unique trading facility that is provided by a few brokers
- The BTST Trading facility can only be availed for scripts that have been approved by the share broker. For instance, many stockbrokers don’t allow BTST for some smallcap and midcap stocks.
- As of now, most of the brokers do not offer BTST facility for SME companies
- The Buy Today, Sell Tomorrow facility cannot be availed for stocks in the T2T Segment (Trade to Trade Segment), wherein you need to compulsory take delivery of the stocks.
Now, we share with you some advantages and disadvantages of BTST trading.
- Buy Today, Sell Tomorrow trading allows you to benefit from the short term volatility, i.e., increase/decrease in the price of the stocks
- In BTST trading, you need not pay Demat Debit Transaction Charges as shares do not get credited to your Demat account.
- If intra-day trading is unprofitable, going with BTST trading gives you two more days for your trades to improve performance.
- Most of the stockbrokers do not provide margin in Buy Today, Sell Tomorrow trading. Here, the customers need to pay the full amount as the orders are cash & carry orders
- BTST Trading runs the risk of short delivery. You can be penalized by the exchange.
BTST Brokerage Charges
The BTST Charges on T+1 or T+2 day Sell
In this case, Equity delivery brokerage charges will be applied.
Some BTST Brokers
You may like: Best Stock Investment and Trading Books
What is STBT (Sell Today Buy Tomorrow)?
STBT is the reverse of BTST. It means Sell Today and Buy Tomorrow. Here, shares are sold first and then bought.
So, STBT is a facility wherein customers can sell the shares in the cash segment (those shares which are not in the Demat account) and buy them on the next day.
STBT in Cash Market is not allowed in India.
None of the brokers in India provide an STBT facility in the cash market as it’s not permitted.
STBT can be done in Equity and Commodity F&O using Future trade and call or put options.
In STBT, the trader sells the stock today and purchases the same on the next day. It is done for those F&O stocks that you expected to trade at a lower price Tomorrow than the price they are trading today.
STBT position is taken when the stock breakout in the downward direction.
For example, suppose that Reliance Industries is trading at around 915 suddenly falls to 900 levels (during the end of the day), then STBT position can be taken. So, the trader can recover his position in the F&O segment on the next day when the price becomes lower than the price trading today.
Moreover, it is recommended that you should trade using a stop loss in place. You also need to follow the decided stop loss when buying and selling.
You should also avoid trading in either BTST or STBT when the market is facing high expected volatility. You should not trade when some big event is scheduled to happen overnight.
Such events could either be connected to the Indian Stock Market or Global Market. Some examples of this include events such as – RBI Policy Declaration, FED Meeting, Company Result Day, etc.
When you follow such rules, you definitely stand to make good money and build wealth.
However, suppose you’re a beginner in the stock. In that case, you must first build a basic understanding of the market before you go on to invest your hard-earned money in it.
Well, that’s all we have for you in this post on BTST and STBT. We hope that the post proved beneficial to you. Thanks for visiting us at MoneyGlare.
We look forward to your comments and suggestions. Please do share this post across popular social networking channels.