BTST is short for buy today sell tomorrow. A short-term trading strategy called trading where the trader purchases a stock today and sells it the next day prior to being delivered into their demat account. The idea is to take quick profits within a 24-hour period.
If implemented properly, BTST can take advantage of short-term price movements. Follow these smart steps to mitigate risks and maximize success. In this guide, we share our top 5 BTST trading tips to trade in a safer, better, and simpler manner.
What Is BTST Trading?
BTST (Buy Today, Sell Tomorrow), is to buy stocks today, then tomorrow, before any of the shares are credited to demat, is sell them. The reason this is possible, is the stock exchange has a T+2 settlement time (means Trade date + 2 days). So for these shares, you can sell them on Day 2 since they have not yet been credited to your account.
It’s important to remember. BTST is not intraday because you will not ‘square off’ the position on Day 1. BTST is also not delivery trading, it is a form of trading that allows you to sell our shares before you wait 2 days to take delivery of the shares.
Why Use the BTST Strategy?
BTST is helpful when:
- You expect the stock price to increase the next day.
- You want to trade intraday to next day without holding for many days.
- You want to avoid delivery charges.
- You want to book quick profits in short time.
But BTST does also have risks. So it is important to be aware of safe BTST practices and trade with discipline.
Top 5 BTST Trading Tips
Let’s now look at the best BTST trading tips you should follow to succeed in this short-term profit method.
1. Choose Liquid and Volatile Stocks
Rule number one of BTST is you need to choose your stock wisely.
- Select liquid stocks stocks that are traded in large quantities on a daily basis.
- Use caution with penny stocks, or even stocks that hardly trade with low volume.
- Look for volatility stocks that move up and down with some decent momentum.
- Stocks that are active often have better chances of moving quickly, which is essential for this short-term stock tip.
TIP use stocks in Nifty 50, or top mid-cap stocks for BTST.
2. Check for News and Events
Prior to entering a BTST trade, it is always a good practice to have a look at the news that could impact the stock price. Examples of news could include:
- Company earnings
- Government policy changes
- Global market news
- Any corporate announcement scheduled in the future
If it looks like there are any major news expected, it would be prudent not to do BTST trades that day, as the stock could open way up or way down, introducing significant risk into your trade.
Tip: Safe BTST practices indicate that you do not want to be trading just prior to any earnings or major event.
3. Use Technical Analysis for Entry
BTST is all about timing, and since you’re in the stock for only one night, you’ll want to use basic technical indicators to determine your entry position.
Examples are:
- Breakout patterns
- Support and resistance level
- RSI (Relative Strength Index)
- Moving averages
For example, if a stock breaks resistance, with good volume, you may have a good profit technique using BTST.
Tip: Always buy at the correct price level, and don’t chase the stock
4. Set a Stop-Loss and Target in Advance
A stop-loss and a target price should attach to every trade.
- The stop-loss helps protect your loss if your trade goes sour.
- The target helps to lock in the profit when the stock reaches the level you expected.
Because BTST is short-term, it is necessary for the risk reward to be at least a 1:1.5 or 1:2 ratio. This means if your stop-loss is ₹5, then your target should be ₹8- ₹10.
Tip: When the stock hits your stop-loss or target, exit. Do not hold hoping it will reverse.
5. Avoid Overtrading and Stick to One Trade
BTST is not about trading 10 times in 1 day. It is about trading with intent, and realizing that you may only trade a few times a month, at best. Most traders will fail if they trade without a plan or trade out of boredom.
- Limit yourself to one or two high statistical plays in a week.
- Don’t trade under duress, or because the set-up is unclear.
- Check your BTST trades once per week, to identify errors.
Tip: Keep a trading diary and on the 1st day of the new month, review your BTST “scorecard”.
Bonus Tips for BTST Success
Here are a few extra tips that can maximize your BTST (Buy Today Sell Tomorrow) results:
- Find a broker that supports BTST trades.
- Always check the brokerage charges and tax implications.
- When trading BTST as a beginner, always trade in small portions of your capital.
- Do not trade whether a stock has a circuit limit ( upper circuit/ lower circuit, that means freeze).
Always be cautious. Just because someone else made a BTST trade, doesn’t mean you should do the same based on their recommendation, conduct your own research.
Real Example of a BTST Trade
Let’s say you see Stock A breaking out at ₹200 with strong volume on Monday. You enter the trade at ₹201.
- Your stop-loss is ₹195.
- Your target is ₹210.
On Tuesday, the stock opens at ₹208. You book profits and exit.
This simple intraday to next day strategy gives you a profit of ₹7 per share in one day.
Conclusion
BTST can be an effective way to make money in the stock market and not have to hold any stocks for long. It allows a trader to profit off price movement over a one-night time span. However, it can still be a loss if not utilized properly.
Follow these tips for BTST trading:
- Select stocks carefully
- Perform news research
- Use technical analysis
- Set stop-loss and target
- Be patient when trading
With practice and discipline, you can use BTST as a potential step in your trading toolkit.
FAQs
Q1. Is BTST safe for beginners?
If you take trades with a stop-loss and don’t trade around major news events, BTST can be safe.
Q2. Can I do BTST in any stock?
No. Use liquid and volatile stocks which will be easier to enter and exit.
Q3. How much profit can I make in BTST?
Profits are small (1%-4%) on each trade but if consistently done, they add up.
Q4. Are there any charges in BTST?
Yes, brokerage, taxes, and other charges will apply. Always check with your broker.
Q5. Is BTST allowed by all brokers?
Most full-service brokers allow BST. But always double-check with your broker platform.
