Recently, many people have been discussing day trading stocks, and indeed, intraday trading in Taiwan stocks has become more and more common over the past few years, with trading volume accounting for nearly 40%. I’ve also observed that many investors are attracted mainly by the prospect of quickly profiting from intraday fluctuations while avoiding the risks of holding stocks overnight.

In simple terms, buying and selling stocks on the same day is T+0 trading, also called day trading or intraday trading. Taiwan stocks originally operated under a T+2 settlement system, so how is it now possible to complete buy and sell transactions within the same day? It’s actually made possible through brokerage firms’ margin trading and securities lending services. You can imagine it like this: buying TSMC at 9:15 a.m. and selling at 2:30 p.m., completing the entire process within a day, thus avoiding potential overnight risks.

Currently, there are mainly two ways to do day trading in Taiwan stocks. One is cash-based day trading, using your own funds to buy and sell directly. To participate, you need to have an account open for at least three months and have completed more than 10 trades in the past year, with relatively low costs (0.15% securities transaction tax plus 0.1425% handling fee). The other is margin and securities lending day trading, borrowing money or stocks from the broker, which requires more trading history and a trading volume exceeding NT$250k, but the costs are higher (0.3% securities transaction tax, 0.1425% handling fee, and an 0.08% borrowing interest rate).

Interestingly, the same stock can be day traded an unlimited number of times within a single day, as long as there is sufficient capital or credit limit during trading hours. But here’s a trap—frequent trading can rack up enormous costs. For example, if you trade five times a day, the combined transaction fees and taxes can reach 1.45%, meaning the stock needs to rise significantly for you to actually profit.

Besides stocks, other financial products can also be traded intraday. Futures are naturally T+0, with high leverage and low costs (transaction tax of 0.02%, handling fee around NT$30), but require a margin of tens of thousands of dollars. Options have a lower barrier, needing only a few thousand NT dollars for premium. There’s also CFDs (Contracts for Difference), which have the lowest entry barrier—opening an account with just tens or hundreds of dollars—and the main trading cost is the spread, making them very suitable for short-term swing trading.

I’ve noticed that many beginners are attracted to day trading because they think it’s a “no-capital business.” But this is actually a misconception, as it involves leverage risk. If you get the direction wrong and don’t cut losses in time, losses can escalate very quickly. Moreover, if you don’t have enough cash and insist on day trading, once losses exceed your account balance, you could face margin calls and huge debts.

The advantages of day trading stocks do exist—quick stop-loss, avoiding overnight risk, and relatively low costs. But the risks are equally clear—requiring long hours of monitoring, trading costs eating into profits, and improper leverage use leading to margin calls. Especially in the U.S. stock market, there’s the PDT (Pattern Day Trader) rule: if your account is below $25,000, you can only make up to three day trades within five business days.

Regarding trading methods, it’s actually quite simple. If you expect the stock to go up, buy and sell within the same day (long position); if you expect it to go down, sell first and buy back later (short position). But the key details—what tools to use, how to set stop-losses, which time periods to trade—are what determine success or failure. Generally, the most active and volatile periods are at market open, close, and during major news releases, which are the golden hours for day trading.

Honestly, day trading stocks isn’t suitable for everyone. If your judgment isn’t strong, your risk tolerance is limited, or you don’t have enough time to monitor the market, I recommend being more cautious. Although it looks simple, day trading actually requires extensive market knowledge, mental discipline, and strict rules. Many people overestimate their abilities after a few successful trades and end up suffering heavy losses.