What are the risks involved in BTST?

Market Session Variability: A price increase in one market session may not necessarily extend to the next session, potentially resulting in an overall loss compared to intraday trading.

Short Selling Risk: One of the primary risks of BTST is short selling, where trades occur without shares settling in your account. If the seller defaults on timely stock delivery, you may be unable to fulfill your obligations as the seller, leading to the risk of an auction penalty. This penalty can amount to up to 20% of the value of the short-sold shares.

Short Delivery Defined: Short selling occurs when a stock seller defaults on delivering stocks for the settlement.

Auction Process: In case of seller default, the exchange conducts an auction on the T+1 day and delivers to the buyer on T+2 day, and the defaulting seller is required to pay an auction penalty collected by the exchange.

In addition to the above risks, there are specific disadvantages associated with BTST:

SEBI Rule Change: In 2020, SEBI changed BTST rules, requiring traders to maintain a 40% margin before executing a BTST trade.

Lack of Broker Margin Facilities: Unlike intraday trades, TradeJini does not provide margin facilities, necessitating traders to invest the entire capital when purchasing stocks.