What is Buy Today Sell Tomorrow (BTST) | BTST क्या है इसके क्या फायदे और नुकसान हैं?
What is BTST in share trading?
If you are new to the stock market chances are that you have come across repeated terms of BTST trade or Buy Today Sell Tomorrow trades. Many new trades are stumped by the question of what is BTST trade.
BTST is an abbreviation for Buy Today Sell Tomorrow where is STBT means sell today buy tomorrow.
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| What is BTST |
In BTST you can buy the stocks day and sell them before receiving them in your Demat account on T + 2 day. The STBT facility allow the investors to sell the shares first and by them later. Almost all the brokers in India offer BTST facilities but no broker allows STBT as short selling is not permitted in the cash equity segment.
These trading facilities of BTST and STBT help the customers benefit from short term price volatility in the stocks.
BTST trade are those trades, where trader take advantage of short term volatility by buying today and selling tomorrow. Under this facility traders can sell the share which they have bought previously before they are delivered to their Demat account or before they are credit into their Demat account.
In the normal trading process share are created in T+ 2 days with T being the day of order execution. You cannot sell shares before delivery in the normal trading, However with BTST you can sell shares the same day or with T + 2 day this help traders to benefit from price search in the stock.
How does BTST trade works
When you buy the shares what happens on the settlement date is, that those shares get deposited with your depository participants you receive those shares on T+ 2 day by evening after the market closes. But if you want to sell them of before that you would have to do a BTST trade. Let’s see how you will do:-
Suppose on Monday you buy 10 shares of SBI bank for Rupees 500 each, so your total buy value is rupees 5000. On Tuesday you see that those shares are trading at rupees 5500. Now you feel that you should sell those shares and book profit. Those shares will be sold for rupees 5500. So the settlement date for your buy order is Wednesday and that of the sell order is Thursday.
Now here is how it happens you will receive the shares in your account by Wednesday which you are expected to deliver on Thursday of the T + 2 today remember?
Once you receive those share on Wednesday in your demat account, stock broker mark it as an upcoming obligation those needs to be settle them on Thursday and does the BTST trade is executed. Do note that here your stock broker play a vital role.
Features of BTST Trades
These are the features of BT ST trade
1. In BTST you have the option of selling shares that are not at received in your Demat account. You would have this option till the time you receive the delivery of shares i.e.for two trading days.
2. In trade to trade segment (T2T) since the stocks are extremely speculative BTST is not allowed it is compulsory to place a CNC order .
What are the risk involved in BTST Trades
BTST buy today’s sell tomorrow trades where you buy shares and sell it on T+ 1 day orT + 2 day before the stock is settled and delivered into your Demat account.
Before proceeding further letters read some fact:-
You must have heard of T+ 1,T + 2 and T + 3, Here T is the transaction date and the T+n is the settlement date now transaction date as the name suggest the date at which the trade is executed where as the settlement date is where you get the actual ownership of those traded shares, the date when they are transferred to your Demat account could take 1,2, 3 days.
Now a days Indian stock market has a T + 2 day settlement which is so next one day. By T + 2 what I mean is if I buy share on Tuesday my settlement day will be Thursday .
The risk with BTST trades is that since you are
selling shares that aren’t in your DEMAT account Yet, you are relying on the seller from whom you have brought the shares to give your stock broker (Stock exchange for settlement) if the seller defaults on giving you the shares in the event of delivery, your obligation as a seller to deliver shares won’t be made and you will face the risk of auction penalty .
selling shares that aren’t in your DEMAT account Yet, you are relying on the seller from whom you have brought the shares to give your stock broker (Stock exchange for settlement) if the seller defaults on giving you the shares in the event of delivery, your obligation as a seller to deliver shares won’t be made and you will face the risk of auction penalty .
There is no penal fixed penalty for short delivery the difference of price at which exchange buy stock in the option and your selling price the difference you have to make good in your trading account. On Auction day it depends on the price of the stock and liquidity, sometimes it can be up to 20% of the value of the stock short delivered.
BTST brokerage charges
On trading day if the buy and sell order of a particular stock is placed on the same trading day it will considered as intraday trading and accordingly you will be charged as your stock broker allows BTST brokerage charges on T + 1 or Tt + 2 days.
In these cases equity delivery brokerage charges are Applied, some stock broker offers free delivery while some may charge a defind BTST brokerage free.
I hope you have understood the the basic idea of BTST. If you have any suggestion please comment me . Thank you.
If you want to learn more about share market please read these articles advanced concepts of stock market, Hilega Milega concept.
FAQ
Q-1 What is the risk of doing BTST?
Ans:- There is a small risk of sir delivery it only happens when the buyers you bought the shares from does not give you delivery of the stock before the end of the next day.
Q-2 Who is auction of stock?
Ans:-When obligation as a seller to deliver shares won’t be made then you will face the risk of auction penalty.
Q- 3 What is STBT?
Ans:- Sell Today and Buy Tomorrow , but no broker provides this facility.