“Buy Today, Sell Tomorrow” is a trading facility wherein you can buy the stock today and sell it tomorrow before you get the delivery of the shares in your DEMAT ACCOUNT. What this means is that if you buy a stock for delivery on Monday, you sell it on Tuesday, before you get delivery of the stock. In INDIA many brokers allow doing BTST on their platform.
Here we will learn how to do BTST in Zerodha. To do BTST in Zerodha you have to buy the stock using CNC product type and the next day you can sell the stock using the CNC product type. For example- On Monday you buy the shares of Reliance at 2100 and reliance went down to 2000 but you’re expecting an upside move tomorrow so hold the stock. On Tuesday Reliance went up to 2200 levels then you want to exit the trade and book the profit, so you sell the share using CNC. Though you don’t have shares in your Demat account, because in India delivery takes place on T+2 days, your share will be delivered on Wednesday.
Advantages of BTST
- It allows you to take benefit from the short-term volatility or increase/decrease in the price of the stocks.
- BTST trades do not attract Depositary charges as shares are not credited in your Demat account. Delivery charges are zero on Zerodha.
- If you find intra-day trading unprofitable, then BTST gives 2 more days to your trades to improve its performance.
Disadvantages of BTST
- Unlike intraday trading, most stockbrokers do not offer margin to BTST facilities. The customer has to pay the full amount as the orders are cash & carry orders. You don’t get leverage in carrying your position as you get in Intraday.
- BTST may result in paying penalties, assume you buy the shares on BTST on Monday and sold them on Tuesday. You will get the delivery of bought shares on Wednesday and you also need to deliver the sold shares on Wednesday. In the case of short delivery, you will also not be able to deliver the shares and hence will be penalized by the exchange
- The penalty issues only occur on ill liquid stock where upper circuit or lower circuit occurs. To avoid penalty on BTST you should select stocks that come under F&O.
- Zerodha also pops a message on ill-liquid stocks that these stocks cannot be traded as BTST and Intraday.
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