Are there risks involved in using BTST orders?
BTST is an order type wherein you can take a position and sell it on the settlement day (T+1).
The risk of trading using the BTST order facility is that since you are selling shares that you don't actually hold in your demat account and you rely on the initial seller for delivery. If this seller defaults/short delivers, you face the risk of defaulting on your delivery obligation as a seller (when you close the position).
If this happens, you will have to pay an auction penalty, if any, which can be up to 20% of the value short delivered by you.