what is btst and stbt in trading

What is BTST and STBT trading?


BTST and STBT for Beginners: BTST and STBT are two important concepts in the stock market. The full form of BTST is “Buy Today Sell Tomorrow. Likewise, the full form of STBT is “Sell Today Buy Tomorrow”. The traders are always looking for opportunities to make more money in the market. The positions by them can take neither in cash segment or f&o segment stocks. The purchase and sale of stocks are based on technical or fundamental strength. Furthermore, conviction of the traders also plays a crucial role.

In this article, we shall understand the concept of BTST and STBT.

Firstly, let us learn the meaning of BTST.

⇒ What is BTST?
BTST means Buy Today Sell Tomorrow. The full of the term BTST makes the meaning of the term very clear. BTST is a short-term trading opportunity. The trader purchases the share today either in cash or f&o segment and later sell it on the next day. Unlike taking a long position and holding it for some time, the trader exits the stock on the next day of purchase. BTST position is taken in those stocks which are expected to trade at a higher price tomorrow then the price they are trading today.

⇒ Difference Between BTST and Intraday
The purchase of stocks in BTST calls is done either on some fundamental or technical study or on basis of conviction of investor. Furthermore, the concept of BTST should not be lined or confused with intraday trading. Intraday trading is purchasing and selling the stock on the same day. While BTST is purchasing the stock today and selling it tomorrow.

After understanding the concept of BTST, let us understand the meaning of STBT.

⇒What is STBT?
STBT is Sell Today Buy Tomorrow. It means that the trader sells the stock today and purchases it back on the next day. Unlike, BTST calls in which stocks can be purchased in cash or f&o segment. The STBT position can be taken only in f&o stocks. The reason being, short selling is not allowed in the equity segment of the stock market. A trader can sell or short only f&o stock in STBT because the short position can be covered. This is not possible in case of equity segment. STBT position is taken in those f&o stocks that are expected to trade at a lower price tomorrow then the price they are trading today.

[ Know First What is Short Selling ]

The traders or investors are allowed to sell any stock which is held in their demat account. However, short selling position in equity segment needs to be covered on the intraday basis only. Otherwise, such short sell shares will be auctioned and the trader shall have to bear the loss. Therefore, it is advisable to be cautious and keep in mind that short selling in cash segment can result in losses.

⇒ How to Trade in BTST and STBT
The general criteria for trading in stocks for BTST and STBT is to trade when the stock breakout in either direction during the market hours. Like for example, Reliance Industries is trading around 900 during the day and at 3 pm it suddenly rises to 916. It suggests a breakout in the price moving pattern. In such case, the BTST position can be taken. The trader can purchase the stock today and sell it tomorrow at a higher price.

Similarly, the STBT position is also taken on the basis of a breakout in the stock in the downward direction. Like for example, if Reliance Industries trading at around 815 suddenly falls to 900 levels at the end of the day, STBT position can be taken. The trader can cover his position in the f&o segment on the next day at a price that is lower than the price trading today.

A stock market is a risky place. While taking any BTST or STBT position, the trader needs to be careful. Any wrong interpretation of the price movement can trap the trader. The markets can move against your expectations and ultimately leaving no option for you but to book loss. Therefore, BTST and STBT positions carried overnight can trap the traders by showing an opposite move.

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