Is it really feasible to buy and sell stocks on the same day? A Complete Guide to Day Trading

What is T+0 Day Trading?

Buying stocks on the same day and selling them on the same day is called T+0 trading, also known as day trading.

Taiwan’s stock market originally adopted a T+2 settlement system (settlement occurs on the second trading day after purchase), but since the introduction of spot day trading in 2014, day trading has accounted for nearly 40% of Taiwan stock market transactions, with the number of participants increasing year by year.

Why do so many people engage in day trading? The main reason is simple—buy and sell within the same day. Investors can buy TSMC(TSM) at 9:15 AM and sell at 2:30 PM, earning the price difference in between, without worrying about overnight risks.

How exactly does day trading work? Two options to choose from

1. Spot T+0 Trading (using your own funds)

Trade on the same day with your own capital; the operation is relatively straightforward:

Bullish (Long): Buy in the morning + sell in the afternoon
Bearish (Short): Sell in the morning + buy back in the afternoon

Account opening requirements:

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

Cost calculation:

• Securities transaction tax: 0.15%
• Commission fee: 0.1425%

2. Margin Trading (borrowing money or stocks from a broker)

Use financing (borrowing money) or securities lending (borrowing stocks) to amplify trading scale:

Margin Long: Borrow money to buy + short sell stocks
Margin Short: Short sell stocks + borrow money to buy

Account opening requirements (more strict than spot trading):

• Open 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 to open a credit account

Cost calculation:

• Securities transaction tax: 0.3%
• Commission fee: 0.1425%
• Borrowing interest rate: approximately 0.08% (average)

Day trading vs Futures vs Options vs CFD: Who has the lowest costs?

The deadly temptation of day trading: Hidden risks behind the advantages

( Looks very attractive

✓ Same-day settlement, timely stop-loss: No need to wait until the next day; if the judgment is wrong, you can exit immediately
✓ False illusion of no capital needed: Buying and selling within the same day seems to require no capital occupation
✓ Avoid overnight risk: Prevent gaps caused by overnight news

) The real killer risks

❌ Leverage trap: Margin day trading is essentially borrowing money; if the direction is wrong, losses can be amplified. Many retail traders use leverage beyond their capacity, ending up with huge debts

❌ Cost erosion of profits: Multiple costs such as transaction tax, commissions, financing interest, etc., eat into your profit margins. Calculating with 0.3% transaction tax + 0.1425% commission, the one-way cost is 0.4425%, round trip totals 0.885%, requiring over 0.9% price movement to break even

❌ Huge time cost: Day trading isn’t just a quick glance; it requires monitoring the market all day—stock trends, index fluctuations, capital flow changes, news, etc. Many find that they spend a lot of time and effort just to earn a few hundred dollars

❌ Inability to settle positions: Market fluctuations may prevent closing positions on the same day, forcing delays until the next day, violating day trading rules, and risking fines or account suspension

❌ No partial shares for day trading: Want to day trade with fractional shares? Not possible. Taiwan stocks do not allow credit trading for fractional shares; they can only be sold the next day

Who is suitable for day trading?

Honestly, most retail investors are not suitable. Day trading is suitable for:

• Full-time traders with ample time to monitor the market
• Investors with strong risk tolerance and good psychological resilience
• Traders with sufficient capital who do not rely on leverage
• Those with in-depth technical analysis and a complete trading system

Not suitable for:

• Office workers who cannot watch the market all day
• Those with tight funds relying on leverage
• Traders prone to emotional decisions and poor stop-loss discipline
• Beginners still exploring the market

What instruments can be used for day trading?

List of day trading stocks in Taiwan

Taiwan 50 Index, Mid-Cap 100 Index components, and the FTSE TWSE Taiwan 50 Index components, totaling about 200 stocks

Naturally suitable for T+0 trading

Futures: Agricultural products, stock index futures, etc., settle daily by nature. Low cost (about NT$30 per contract), but high leverage (usually over 10x), with high risk

Options: Call or put options, which can be exercised or abandoned. Low threshold (a few thousand NT$), but if the judgment is wrong, the entire premium is lost

CFD (Contract for Difference): Virtual trading via broker contracts. Lowest account opening threshold (starting from a few tens of USD), wide range of underlying assets (stocks, forex, gold, cryptocurrencies, etc.), flexible leverage, but also very risky

Practical steps for day trading

Using a certain trading platform as an example, the process is simple:

Step 1: Select the trading instrument (stock, futures, options, or CFD)

Step 2: Analyze the price trend for the day, decide whether to buy or sell

Step 3: Place an order

• Bullish → Click buy (go long)
• Bearish → Click sell (go short)

Step 4: Set stop-loss and take-profit prices (this step is crucial; many skip it and end up losing heavily)

Step 5: Close the position within the day; trade is complete

Common questions and quick answers

Q: Can fractional shares be traded on the same day?
A: No. Fractional share trading does not support credit trading; they can only be sold the next day

Q: What is the best time for day trading?
A: Within the first 15 minutes after opening, near closing time, and during major news releases. These periods have high volatility and many trading opportunities, but also higher risks

Q: Are there restrictions on US stock day trading?
A: Yes. For regular accounts, no more than 3 trades within 5 business days; accounts with less than $25,000 are frozen for 90 days. Accounts exceeding $25,000 have no restrictions

Final advice

Day trading is like a close relative of gambling—fast, exciting, addictive, and easy to wipe out your savings.

Statistics show that over 90% of day traders ultimately lose money. The 10% who profit usually do so not by luck but because they have: sufficient capital, strict discipline, a complete trading system, strong psychological resilience, and have spent over 5 years honing their skills.

Before deciding to day trade, ask yourself: do I truly possess these qualities? If not, instead of gambling with day trading, consider swing trading or long-term investing, which carry lower risks and are mentally more manageable.

Day trading is not a shortcut; it’s a high-difficulty sport. Before entering, make sure you are truly prepared.