30 Jan, 2026
4 mins read
BTST trading is a short-term strategy that allows traders to benefit from price movements without waiting for share delivery. It is particularly popular among active market participants who seek quick profits based on momentum or news. In this blog, we’ll explain how BTST works, its rules in India, along with advantages, risks, and a simple example.
BTST stands for “Buy Today, Sell Tomorrow.” It refers to buying shares on one trading day and selling them the next day before they are credited to your demat account.
When you buy shares on a delivery basis, they usually take T+2 days (trade date plus two working days) to reach your demat account. BTST allows you to sell those shares the very next day (T+1), even though the delivery has not yet happened.
This is possible because brokers allow you to sell based on the assumption that you will receive the shares on settlement day.
Here’s how the process unfolds:
Buy Shares: You purchase shares on Day 1 using the delivery option.
Sell on T+1: On Day 2 (before settlement), you sell the shares.
Settlement on T+2: The shares you initially bought are delivered to settle the sell transaction.
Since the shares are sold before they are credited to your demat account, BTST relies on the stock exchange’s settlement process and broker systems.
BTST attracts many retail traders for a few key reasons:
Short-Term Profits: Traders aim to benefit from overnight news or positive momentum.
No DP Charges: Since shares don’t hit your demat account, you avoid depository charges.
Avoid Intraday Square Off: Unlike intraday trades, you are not forced to close your position within the same day.
Flexible Timelines: You get one extra day to monitor price action and decide on an exit.
While BTST trading is allowed, certain rules and conditions apply:
T+2 Settlement: The Indian stock market follows a T+2 settlement cycle. BTST is valid as long as the shares are sold before the delivery date.
Eligible Stocks: Not all stocks are available for BTST. Check with your broker for approved stocks.
Auction Risk: If the broker fails to receive shares, you could face an auction penalty.
SEBI Regulations: Trades must follow SEBI’s norms on margin requirements and settlement discipline.
Each broker may also set internal policies, including margin limits and charges.
BTST has several potential benefits for active traders:
Profit from Overnight Moves: Traders can capitalise on news or global market trends that affect stock prices the next day.
No Need for Full Payment: Margin trading allows you to take larger positions without paying the full amount upfront.
No Demat Delivery Required: Since shares are not held long-term, there’s no waiting for credit.
Lower Costs: You can avoid some charges like DP fees associated with delivery trades.
Despite its benefits, there are certain downsides:
No Guarantee of Delivery: There is a risk that you may not receive the shares on time, leading to auction.
Price Gap Risk: Adverse price movements overnight can lead to losses.
Not Ideal for All Stocks: Illiquid or low-volume stocks may be harder to sell on T+1.
No Control on Timing: You must act quickly, sometimes without enough technical confirmation.
BTST works best in high-volume, actively traded stocks with stable delivery records.
Traders must be aware of these specific risks:
Auction Risk: If you sell shares before receiving them and your broker cannot arrange the delivery, the trade may go into auction. You may then have to buy the stock at a higher price.
Volatility: Markets can be unpredictable overnight. Global news, earnings, or economic data can swing prices against your position.
Margin Calls: If the stock price drops, you may be required to add funds to maintain the position.
Limited Control: You depend on broker systems and exchange settlements, which may occasionally face issues.
Using stop-loss orders and selecting liquid stocks can help reduce these risks.
Let’s say you buy 100 shares of Company X at ₹500 on Monday.
On Tuesday, the stock opens at ₹515 due to positive earnings news.
You sell your shares at ₹515, making a profit of ₹15 per share.
On Wednesday (T+2), the shares are delivered and used to settle your Tuesday sale.
In this case, you earned ₹1,500 before brokerage and taxes, without waiting for full delivery.
BTST is a useful strategy for short-term traders looking to benefit from quick price changes without the limitations of intraday trading. It offers flexibility, lower charges, and the chance to act on news or market trends. However, it comes with risks like auctions and overnight volatility. Traders must understand the process, follow broker rules, and use risk controls for best results.
It means buying shares today and selling them tomorrow before they are delivered to your demat account.
Yes, it is allowed and commonly used by traders in the Indian stock market.
BTST stands for “Buy Today, Sell Tomorrow.”
It depends on the trader’s style. BTST gives more time than intraday but also carries overnight risk.
Yes, but beginners should start small and understand the risks, especially related to auction and volatility.
Calculate your Net P&L after deducting all the charges like Tax, Brokerage, etc.
Find your required margin.
Calculate the average price you paid for a stock and determine your total cost.
Estimate your investment growth. Calculate potential returns on one-time investments.
Forecast your investment returns. Understand potential growth with regular contributions.
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