Mastering the Buy Today Sell Tomorrow Trading Strategy

Dive deep into the nuances of the Buy Today, Sell Tomorrow (BTST) trading strategy. From understanding its core purpose and comparing it to intraday trades, to highlighting the importance of research and liquidity—this guide breaks it all down. Navigate the world of short-term trading armed with insights on risk management, the significance of staying updated, and the impact of costs on your profits. Whether you're a novice or a seasoned trader, this post offers valuable takeaways to refine your trading approach and make informed decisions. Stay disciplined, stay informed, and let this guide pave the way for your BTST success.


7/20/20231 min read

Understanding the Buy Today, Sell Tomorrow (BTST) Trading Strategy

The Buy Today, Sell Tomorrow (BTST) approach is a popular trading tactic that capitalizes on brief fluctuations in stock prices. Here's a concise breakdown:

  1. Purpose: BTST caters mainly to short-term traders aiming to profit from price changes that manifest either overnight or during the subsequent trading session.

  2. Comparison with Intraday: Unlike intraday trading where shares are transacted within the same day, BTST involves selling shares the following day, either in cash or through futures and options (F&Os).

  3. Settlement Dynamics: After purchasing shares, they should ideally be transferred to the trader's demat (dematerialised) account due to the settlement process. But in BTST, shares are offloaded before they reach the demat account.

  4. Research is Paramount: Before diving into a BTST trade, it's imperative to deeply analyze the target stock. Keep a keen eye on:

    • Potential triggers (e.g., news, events)

    • Technical patterns

    • Fundamental attributes

    All these factors can sway stock prices in the short term.

  5. Selecting Liquid Stocks: Prioritize stocks with substantial liquidity (high trading volume). This ensures smooth buying and selling without noticeably altering the stock's price.

  6. Awareness of Risks: BTST isn't without its challenges.

    • Understand your risk appetite and set fitting stop-losses to curtail potential setbacks.

    • Diversifying the trading portfolio can mitigate the influence of a single stock's performance.

  7. Overnight Concerns: Retaining positions overnight exposes you to sudden market shifts, due to unforeseen news or significant announcements. Staying updated on pertinent events during off-hours is crucial.

  8. Cost Consideration: It's essential to factor in brokerage charges and related transaction fees with BTST, as they can eat into profits.

  9. Attitude Matters: Avoid rash decisions in BTST. A disciplined, patient approach typically yields the best results.

Adopting this strategy requires a well-informed, diligent mindset, ensuring traders maximize opportunities while minimizing risks.