Recently, someone asked me whether stocks can be bought and sold on the same day. Actually, this is what the market calls day trading—also known as day trading (intraday trading). I’ve noticed that many beginners have a somewhat blurry understanding of this concept, so today I’d like to share my explanation.

To put it simply, day trading means using margin financing and securities lending to complete buy and sell transactions within the same day and earn the price difference. Even though the Taiwan stock market uses a T+2 settlement system, through brokers’ margin financing and securities lending services, you can fully carry out same-day buy and sell. For example, if you buy TSMC at 9:15 a.m. and sell it at 2:30 p.m., you close the position with one buy and one sell—that’s day trading.

There are two main ways to do day trading. One is cash stock day trading, which uses your own funds to trade and is relatively simple and straightforward. The other is securities-and-margin day trading, where you borrow money or stocks from the broker, allowing you to increase the scale of your trades. The transaction fee for cash stock day trading is 0.15% securities transaction tax plus a 0.1425% handling fee; for securities-and-margin day trading it is 0.3% securities transaction tax, 0.1425% handling fee, and you also need to add the borrowing interest.

Many people are drawn to day trading mainly because they can close out and exit within the same day, quickly stop losses, and avoid the risk of holding positions overnight. And from a certain angle, day trading is almost a business with no upfront capital—after the buy and sell are settled, the trading funds are returned. But there are also pitfalls. Trading frequently causes fees to add up fast. If you trade 5 times in a day, your total cost could eat up 1.45% of your profit, meaning the stock would need a fairly large price increase to break even.

Regarding limits on the number of trades, Taiwan’s stock market does not have a clear upper limit on how many day trades you can make. As long as you have sufficient funds or credit, you can execute unlimited trades during trading hours (from 9:00 a.m. to 1:30 p.m.). However, in practice, factors such as funding limits, restrictions on eligible stocks, and trading costs will directly affect how often you can trade. Not every stock can be day traded—only those that meet the Taiwan Stock Exchange’s rules for “day-tradable stocks” are eligible, which is about 200 stocks. Odd-lot trading is not open for day trading.

To be frank, day trading requires a lot more homework than swing trading. You have to watch intraday price movements, changes in order flow/positioning, and relevant news in real time, and you also need sharp judgment. When the market is highly volatile, even a slight mistake in judgment makes it easy to lose money. I’ve seen many people get lured into day trading, only to end up losing badly because they use leverage too aggressively, don’t cut losses in time, or take profits too early.

Besides stocks, financial products such as futures, options, and contracts for difference are naturally T+0 products, so you can buy and sell on the same day. Futures require a margin of tens of thousands of yuan to trade; options have a lower threshold and only require a few thousand yuan in option premium; and contracts for difference have the lowest entry barrier—you can open an account with just tens to hundreds of dollars.

So stocks can be bought and sold today, but it depends on whether you’re truly prepared. If your ability to judge the market isn’t strong enough, or your risk tolerance is limited, day trading may not be the best choice for you. This kind of trading style is suitable for traders who have ample capital, can keep an eye on the market for a long time, and have a strong risk awareness. If you decide to try it, you must first understand your eligibility to open an account, the fee structure, and where the risks are—don’t blindly follow the trend.