Is day trading really feasible? A full analysis of the five major T+0 trading strategies

Is Day Trading Really a Stable Shortcut to Profitable Returns?

Many investors have asked: can I buy today and sell today? The answer is yes, this is what the market commonly refers to as “day trading” or “T+0 trading,” which is essentially same-day trading. But this is nothing new — Taiwan stocks have allowed this since 2014, and now day trading accounts for nearly 40% of Taiwan stock market volume.

It sounds very attractive, right? Settling today, avoiding overnight holdings, and preventing black swan events during sleep. But what you need to know is that day trading is far more complex than swing trading, requiring much more time and risk tolerance.

How to Do Day Trading? A Comparison of Five Methods

If you want to participate in day trading, you have five options. Each has different costs, entry barriers, and risks. Choosing incorrectly can be costly.

Option 1: Spot Day Trading — The Simplest Way to Participate

Use your own funds to buy and sell on the same day, without involving margin or securities borrowing. The logic is straightforward:

• Bullish: Buy in the morning → Sell in the same day
• Bearish: Sell in the morning → Buy in the same day

Participation Requirements:

• Open an account for at least 3 months
• Complete at least 10 trades in the past year
• Sign the risk disclosure document

Cost Structure:

• Securities transaction tax: 0.15%
• Commission fee: 0.1425% (both buy and sell)

The biggest advantage of this method is its relatively low cost. The downside is you need sufficient cash, and if your judgment is wrong, losses are real.

Option 2: Margin Day Trading — Requires Credit Limit

Borrow money or stocks from your broker to trade within the day. Divided into two types:

• Margin buy + short sell (for bullish scenarios)
• Short sell + margin buy (for bearish scenarios)

Participation Requirements:

• Open an account for at least 3 months
• Complete at least 10 trades in the past year
• Trading amount over NT$250,000 in the past year
• Need a credit account

Cost Structure:

• Securities transaction tax: 0.3% (double that of spot day trading)
• Commission fee: 0.1425%
• Borrowing interest rate: approximately 0.08%

It appears you can leverage less capital for larger positions, but costs are higher. Also, if the market moves against you, losses are amplified by leverage.

Option 3: Futures Trading — Naturally T+0

Futures are inherently T+0 instruments, requiring no special procedures. Buyers and sellers agree to transact at a set price within a specific time, with key features being leverage and two-way trading.

Participation Requirements:

• Contract size in units
• Usually requires tens of thousands of NT$ in margin

Cost Structure:

• Transaction tax: 0.02%
• Various fees: around NT$30 in total

96% of futures traders are speculators. The market is liquid, volatile, suitable for short-term trading. But leverage risk is the highest — a wrong directional bet can wipe out your margin instantly.

Option 4: Options Trading — The Cheapest Leverage Tool

Options are derivatives derived from futures, essentially contracts giving you the right (not obligation) to buy or sell at a specified price within a certain period.

Participation Requirements:

• Contract size in units
• Only a small premium (from NT$1,000s) needed

Cost Structure:

• Transaction tax: 0.1%
• Fees: around NT$10+ per trade

The biggest advantage of options is low-cost leverage — controlling a large position with just a few thousand NT$. But choosing the wrong direction can lead to heavy losses.

Option 5: CFD (Contract for Difference) — The Most Flexible Choice

CFDs are OTC derivatives, where clients trade with brokers after posting margin. The main features are no ownership of underlying assets, no expiration date, and a wide range of underlying assets (stocks, forex, gold, crypto).

Participation Requirements:

• Very low barrier
• Opening an account can be done with just a few tens of dollars

Cost Structure:

• Mainly spreads (the difference between bid and ask prices)

CFDs attract beginners because of low barriers and high leverage. But the same features mean the highest risk.

The Reality of Day Trading: Opportunities vs Traps

( The Appeal of Day Trading

1. Quick settlement, avoiding overnight risk — No worries about unexpected events during the night (geopolitical risks, earnings warnings, etc.)
2. Fast capital turnover — Buying and selling completes a cycle, theoretically a “no-capital” business
3. Reduce holding risk — No need to sleep with open positions

) The Hard Truths of Day Trading

1. Huge time commitment
Day trading isn’t a game you can finish in a few minutes. You need to monitor the market, track individual stocks, market movements, chips changes, news releases — even a one-minute delay can lead to losses. It consumes far more effort than swing trading.

2. Leverage traps
Many are attracted by “no-capital day trading,” but it’s essentially leverage. If funds are insufficient or your judgment is wrong, losses are magnified, risking margin calls or liquidation. Leverage pressure often causes premature profit-taking or stop-loss execution, resulting in big losses and little gains.

3. Costs eat into profits
Fees, taxes, borrowing interest, spreads — these add up. Without a trading advantage, costs can wipe out your profits.

4. Psychological test
Short-term trading demands high mental resilience. Market volatility, frequent wrong judgments, and continuous losses can crush confidence. Many fail not because of lack of knowledge but due to psychological breakdown.

Risk Levels of Different Methods

Who Can Participate in Day Trading?

Taiwan Stock Day Trading Targets: Mainly Taiwan 50, Mid-Cap 100, and Fubon FTSE Taiwan 50 Index components, totaling about 200 stocks. Odd lots cannot be day traded; they can only be sold the next day.

US Stock Day Trading Rules: Regular accounts can make up to 3 trades within 5 business days; accounts with over $25,000 in assets have no restrictions; accounts below $25,000 will have their trading frozen for 90 days.

When is the Best Time to Trade: Opening hours (high activity, liquidity), closing hours (trader concentration), and major news releases (high volatility).

Practical Tips: Avoid Becoming a Statistic of Day Trading Losses

If you really want to try day trading, remember these points:

1. Ensure sufficient funds — Don’t go all-in just because it’s “no-capital day trading.” Instead, reserve enough buffer for potential losses.
2. Set stop-loss points — Don’t believe in “waiting for a rebound.” Stop-loss is the only way to protect your principal.
3. Control leverage — The higher the leverage, the greater the risk. Even if you can earn more, losses will be worse.
4. Calculate costs carefully — Know how much fees, taxes, spreads eat into your profits. Too many trades can consume all gains.
5. Don’t overtrade — The temptation of day trading is frequent operation. But frequent trading means frequent fees and mistakes. Better to trade less but more accurately.

Final Words

Day trading is never a shortcut to stable profits; it’s a high-risk short-term strategy. Some make money, others lose everything. The difference lies in risk awareness, capital management, psychological resilience, and market experience.

If you’re a beginner, start with spot day trading or simulation trading to experience real market volatility. If you lack sufficient funds, time, or risk tolerance, it’s better to avoid risking losses through day trading. Swing or long-term investing might be wiser.

Remember: the market is always there, but your capital is limited.