BTST

BTST (buy today, sell tomorrow) is a trade in which you buy shares in one session and sell them in the next, before the purchased shares have formally settled into your demat account. It occupies the gap between intraday trading (entry and exit the same day) and delivery investing (holding settled shares) — the position is held overnight, capturing the gap between one day’s buy and the next day’s open or intraday move.

Because Indian equities settle on a short cycle, the shares you bought today arrive in demat only after settlement; a BTST sell works because the broker allows you to sell against the incoming delivery. The main structural risk is short delivery: if the original seller fails to deliver, your onward sale can land in the exchange’s auction process, with a penalty cost. Rules and risk policies vary by broker, so check how yours handles BTST before relying on it.

Example

A breakout system buys 200 shares of TATAMOTORS at ₹1,020 near Wednesday’s close, expecting follow-through. Thursday morning the stock opens at ₹1,041 and the system sells: (1,041 − 1,020) × 200 = ₹4,200 gross, hypothetical and before charges. Unlike intraday, this trade carries overnight gap risk — a negative global cue could equally have opened it at ₹995.

Why it matters

For systematic traders, BTST defines a distinct strategy class: overnight-gap capture with no intraday square-off constraint but full exposure to gaps that no stop-loss can protect against while the market is closed. Backtesting BTST rules honestly means modelling entry near close, exit near open, and the occasional adverse gap.

In INDfolio AI, overnight equity strategies like BTST can be built and tested on NSE historical data — see Equity.