Buy Today Sell Tomorrow or BTST is a facility offered by many stock brokers which allows you to sell shares one day after the buy order for the script has been executed, without the actual delivery of shares in your demat account.
As already stated, it is a facility provided by the stock broker and has no involvement of the Stock Exchanges (other than formulating settlement rules) and hence the terms and conditions as well as availability of this facility depends on your stock broker solely.
Why is BTST relevant for you?
Have you ever missed to make huge profits because you were unable to sell shares the next day as they were not credited to your demat account yet?
Have you ever missed to take advantage of gap-up or gap-down opening?
Have you ever found that squaring off your position on the same day hasn't been much profitable because time simple didn't allowed the movement?
If you have ever faced any of the above points, then BTST is relevant for you.
Let us take an example:
Assume that you buy shares of ABC Limited at 11.00 a.m. today. Suppose, at 2.00 p.m. today, the price of this scrip has risen by Rs 10.
But you want to sell these shares tomorrow because you feel that the scrip price will rise further. But the shares would not have come into your demat account tomorrow. What can you do?
BTST is the solution to your query. If you use a Margin Trade, you would gain only to the extent of the price rise that happens today I.e. Rs 10. However, if you wish to take advantage of the price rise over a longer time period, then you would use BTST.
(Note that if you had instead bought shares in Cash and tried selling the same, you would have to wait for payout day before you can sell the share.)
So, you would purchase the share today at 11.00 a.m. and sell it say tomorrow using BTST at 2.00 p.m. In short, BTST helps non-intra day square-off trading.
If you are a Cash Trader and found intra-day trading too unprofitable, BTST gives 2 more trading days, thereby increasing the probability of better returns. So, even a Cash Trader may like to use BTST. If you are a Margin Trader and in case for some scrips you find intra-day speculative trading too unprofitable, BTST gives 2 more trading days, thereby increasing the probability of better returns.
So, you can benefit from the virtually elongated settlement cycle that BTST brings to you.
What are the risks involved in BTST?
Since you're selling shares that haven't been delivered to you yet, you are relying on the seller of the shares from whom you bought the stock. If due to any reason, the seller isn't able to deliver you the stock (this is called Short Delivery), your obligation as a seller (when you are selling the next day) won't be met because you simply do not have the shares yet and hence you will be liable for an auction penalty which can be upto 20% of the value of the shares that you purchased.
Note: In case of short delivery, the other party will also be liable for charges who wasn't able to deliver you the shares however, that is not our concern here.
How to place BTST trades on Upstox or Zerodha?
By now, you would've got a fair idea that BTST is not a special product type. It is just selling of shares before the actual delivery of shares. Also, this type of order ranges over two days hence this order cannot be intraday.
So in order to place a BTST trade in Upstox or Zerodha, you simply need to place a Delivery or CNC order both while buying as well as selling. Since this is a delivery order, there will be zero brokerage charged on this type of trade.