As the name implies, BTST stands for “Buy Today Sell Tomorrow,” which means you must buy shares today and sell them tomorrow. By buying shares today and selling them tomorrow, traders take advantage of short-term market volatility to their advantage.
Features and Important terms of BTST Trading Arches
Settlement Cycle:
In BTST trading strategy, a settlement cycle denotes the period of time required for the completion of a trade deal. This means that upon the completion of a settlement cycle, the buyer of the securities will receive the shares and the seller will receive money.
In both equities and futures and options, there is a different settlement cycle. Stock market settlement cycles mainly fall into two categories:
T+1 trade cycle –
T+1 settlement cycle is used in the case of Equities. The trade date which is denoted by “T” is when the buy or sell order is placed, and the trade day T+1 is when the transaction is completed.
For example, the buyer will receive the shares by Tuesday if he places a buy order on Monday, and the seller will receive the funds by Tuesday if he places a sell order on Monday.
T+2 trade cycle –
During this settlement cycle, the money from your Demat account will be debited immediately when the buy order is placed on Monday, while the shares will be reflected in the Demat account of the buyer on Wednesday.
Note:
There are no Saturdays, Sundays, or other national holidays included in the settlement cycle. While shares of registered companies are transferred ownership, they are held in a depository. Learn in detail about what is a depository system.
Cash and Carry
Basis trading occurs when the spot price of an asset differs from its futures price, and therefore is called basis trading. The goal of this strategy is to make a profit by manipulating price differences.
For example
A normal trader cannot sell shares only after receiving them into their Demat account after T+2 days if the shares appreciate in value on the same day they place a buy order.
As a result, BTST in this case means that if the value of stock changes, you can place a sell order up to two trading days after you place a buy order.
Most of the brokers do not provide BTST as a service to SME companies.
As stock markets are highly speculative, BTST trading is not permitted in the Trade to Trade segment. A CNC order is required.
Charges on BTST Trades –
You can be charged mainly in two ways depending upon what is its BTST trades category –
BTST trade charges in Intraday Trading –
In the case of Intraday trading, if you buy shares on T day and place a sell order on the same day, your broker will charge you the Intraday brokerage fee.
BTST trade brokerage charges in T+n days –
Your broker will charge you equity delivery brokerage fees if you buy shares on T day and sell them on T+1, T+2, or T+n days later.
Remember these points while applying BTST Trading Strategy
When placing orders for buys and sells, you will benefit from the following BTST trading formulas and strategies.
Circuit Limit:
You should set a circuit limit or trading limit of 20% on the share on which you want to apply the BTST strategy. You can definitely plan a position at 3:15 pm if you predict that a particular stock will open at the upper circuit.
Trade in well-known shares:
It should be a well-known share if you are planning to apply the BTST in trading.
Entry and Exit Points:
BTST trade entry point should be between 3:15 pm and 3:30 pm for the share you are trading. Purchase BTST stocks gradually over the next 15 minutes and execute your order between each 15-minute period.
Alternatively, these shares should be exited between 9:15 am and 9:30 am the very next day. BTST is a trading strategy that stops strictly within the first 15 minutes of the next day, and you should exit your position between these 15 minutes.
Candlestick charts are used by traders to predict short-term price fluctuations in BTST stocks. These charts indicate four points: opening, closing, high, and low.
Two types of patterns exist – bullish, which represents an upward trend, and bearish, which represents a downward trend.
Good time for BTST trading:
When the stock market is opening gaps up or down regularly, and this is accompanied by a range of movements, BTST is usually a good option.
Trade in Liquid stocks:
A liquid stock is one that can be bought and sold easily without affecting its price significantly. Therefore, liquidity refers to the ease with which a stock can be traded.
Liquid stocks have a narrow difference between their bid and ask prices and high volume trades. High volume during high floats is another measure of a stock’s liquidity. When a particular stock has a high float, it means there are many shares available.
In addition to learning more about the technical analysis of stock, you could make profit from every market phase by applying these technicals to Buy Today Sell Tomorrow.
Conclusion
Trading is viewed as a risky proposition, and it can be so, however, you can minimize your risk and earn profits from market volatility by learning proper stock market skills and technicals, and that is what btst means.
Starting your trading journey with Buy Today Sell Tomorrow might be a good idea. The stock market offers many different types of trading strategies that you can learn and use to earn a profit.