Actually, many people have asked me whether you can buy and sell stocks on the same day. The answer is yes—this is what everyone commonly calls day trading.

To be honest, day trading in Taiwan stocks isn’t anything new. Since Taiwan’s stock market allowed same-day trading of listed shares starting in 2014, the popularity of this trading style has kept rising. Today, day trading accounts for nearly 40% of Taiwan stock trading volume, and the number of participants has been increasing year by year. Many investors are drawn in mainly because they don’t want to take the risk of holding positions overnight, or because they want to quickly arbitrage using intraday price fluctuations.

Put simply, the core logic of buying and selling the same stock on the same day is this: by using the broker-provided margin financing and securities lending (financing and securities lending) services, you can achieve same-day (T+0) settlement within the original T+2 trading system framework. For example, if you buy TSMC at 9:15 a.m. and sell it at 2:30 p.m., your buy and sell are completed that same day, and the funds are settled the same day. What are the benefits? First, you can stop the loss immediately without having to wait until the next day to take action; second, in theory it’s “no capital business,” because the buy and sell are settled at the same time, so you don’t need to tie up as much capital.

But there’s a key issue here: what conditions do you need to buy and sell the same stock on the same day? In Taiwan, regulations require that you have been an account holder for at least 3 months, have made at least 10 trades in the past year, and sign a risk disclosure statement. If you want to do financing and securities lending day trading (borrow money or borrow shares), the threshold is higher: you need a trading amount of at least 250,000 in the past year, and you also need to open a margin account.

Financing and securities lending day trading and same-day trading of listed shares are actually not that different; the main difference is the source of funds. Same-day trading of listed shares uses your own money, so it’s simpler; financing and securities lending day trading involves borrowing money or borrowed shares from the broker, and you have to pay interest, so the cost is higher. The transaction fee for same-day trading of listed shares is a stamp tax of 0.15% plus a transaction fee of 0.1425%; for financing and securities lending day trading, it’s a stamp tax of 0.3% plus a transaction fee of 0.1425%, plus an average borrowing interest rate of 0.08%. As you can see, the cost per buy-sell is more than doubled. If you trade 5 times in a day, the accumulated costs can eat up a large portion of your profits.

This is also something many people ignore. Buying and selling the same stock on the same day may seem simple, but the costs of frequent trading can be astonishingly high. Once you add up transaction fees, stamp taxes, and interest, the stock would need a substantial price increase for you to make a profit. I’ve seen plenty of people get attracted by the quick gains of day trading, only to end up worn down by fees and taxes.

Not all stocks in Taiwan can be day traded. At present, only constituent stocks of the Taiwan 50 Index, the Mid-Cap 100 Index, and the Fubon FTSE Taiwan 50 Index from the OTC Market are eligible—about 200 stocks in total. Odd lots are not allowed for day trading, and some stocks categorized as disposal candidates or caution stocks may also be restricted. There’s no limit on the number of times you can day trade the same stock on the same day; as long as you have sufficient funds or credit, you can trade as many times as you want. But in practice, factors like capital being tied up, trading costs, and psychological pressure will naturally limit how frequently you trade.

It’s worth mentioning that the day trading rules for the U.S. are completely different. The U.S. has a rule called PDT. If your account value is below 25,000 dollars, within any 5 consecutive trading days you can make at most 3 day-trading buy-sell transactions. If you exceed the limit, your account will be restricted from trading until your net worth rises back to 25,000 dollars. This rule is quite strict, mainly to protect retail investors.

Besides stocks, derivatives such as futures, options, and CFDs are inherently T+0 products, so they naturally allow same-day buy and sell. Futures leverage and two-way trading characteristics make them suitable for short-term strategies, but risks are also high. Options have a relatively lower threshold—you only need to pay a small premium. CFDs are the most flexible, with relatively low spreads, making them suitable for short-term swing trading.

The advantages of day trading do exist: you can stop losses quickly, avoid overnight risk, and theoretically require less capital. But the downsides are also obvious. First, if you don’t have enough capital and still want to day trade, you’ll need to borrow money—this involves financial leverage and greatly increases risk. Many people use leverage too aggressively, get the direction wrong, and fail to stop the loss in time, ending up with massive losses. Second, day trading requires watching the market for long hours; intraday volatility can be huge, and one careless mistake can get you “washed out.” Third, the costs of short-term trading are truly not small. Once costs consume most of your profits, you can only rely on larger price swings to make up the difference—which further increases risk.

In short, day trading the same stock is suitable for investors who have sufficient capital, strong risk tolerance, and the ability to monitor the market long-term. If your funds are tight, your risk awareness is weak, or you don’t have time to watch the market, day trading may not be a good choice. Before investing, ask yourself whether you truly fit this kind of high-frequency, high-risk trading style—and whether you can bear potential losses.