BTST stands for 'buy today and sell tomorrow'. It is also a short-term trading strategy and is a facility that allows you to sell shares even one day after the buy order date, without you having to wait for the receipt of shares into your demat account. Suppose you brought a share and realized that squaring off your cash based transactions within a day is not profitable as one day’s time does not allow you to realize maximum profit. Or if you have thought of an intermediate option between day trading and delivery trading, it is BTST.
For example, assume that you buy shares of ABC Limited at 11 am today. Suppose, at 2 pm 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? You can use the BTST facility to sell the stock the next day. 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 could sell the share. So, you would purchase the share today at 11 am and sell it say tomorrow using BTST at 2 pm. In short, BTST helps non-intraday square-off trading. If you were a cash trader and found intraday trading too unprofitable, BTST provides two more trading days, thereby increasing the probability of better returns. Thus, even a cash trader may like to use BTST. If you are a margin trader and in the case of some scrip you find intraday speculative trading too unprofitable, BTST gives two more trading days, thereby increasing the probability of better returns.