## Do you have to sell on the same day when trading stocks? An in-depth analysis of the truth behind day trading

In the Taiwan stock market, **day trading (day trading)** has become a mainstream strategy for many traders. Simply put, buying today and selling today, which is commonly referred to as **T+0 trading** in the market. But many people ask: Do you have to sell on the same day when day trading? The answer is **yes**, this is the core definition of day trading.

## What is day trading?

**Day trading** refers to completing buy and sell transactions within the same trading day, closing out the position on the same day. The Taiwan stock market originally adopted a T+2 settlement system (buy today, settle in two days), but through borrowing funds or stocks from brokers (margin trading and short selling), traders can achieve T+0 trading within the same day.

For example, a trader might buy TSMC(TSM) at 9:15 AM and sell it at 2:30 PM. The purpose of this is straightforward—**to profit from the price difference between buy and sell**.

## Spot trading vs margin trading: two different approaches

### Spot trading: the simplest method
Use only your own funds for same-day buy and sell. Buy when bullish, sell when bearish, and vice versa.

**Account opening requirements:**
- Open an account with a broker for at least 3 months
- At least 10 transactions in the past year
- Sign risk disclosure and day trading agreement

**Cost structure:**
- Stamp tax 0.15%
- Commission (buy/sell) 0.1425%

### Margin trading: leverage amplification option
Borrow money (margin financing) or stocks (short selling) from brokers to increase trading capacity.

**Account opening requirements:**
- Open an account with a broker for at least 3 months
- At least 10 transactions in the past year
- Trading amount over NT$250,000 in the past year
- Need to open a credit account

**Cost structure:**
- Stamp tax 0.3%
- Commission (buy/sell) 0.1425%
- Loan interest rate (average) 0.08%

## Why sell on the same day? The advantages of day trading

**Since Taiwan stock market opened spot day trading in 2014, day trading has accounted for nearly 40% of total trading volume, with user numbers continuously growing.** This is no coincidence—day trading indeed has its attractions:

**1. Quick stop-loss, avoiding overnight risk**
Traditional trading requires holding positions overnight, which can face sudden negative news. Day trading allows you to close positions immediately, avoiding gap risk during the night.

**2. Fast capital turnover**
Once the trade is settled, funds are immediately available for the next trade. In theory, if you make a correct move, your capital can be quickly reinvested.

**3. The illusion of no capital needed**
The settlement mechanism of buy and sell reduces capital requirements, but this "no capital" approach is actually built on leverage.

## Hidden traps of day trading: why must you sell on the same day

**Seemingly simple day trading actually harbors risks. Completing settlement on the same day is essential for the following reasons:**

**1. Leverage risk multiplies**
Many are attracted by "no capital day trading" but overlook the underlying financial leverage. Insufficient funds but aggressive trading can lead to magnified losses and even huge debts if judgment is wrong.

**2. Costs eat into profits**
Round-trip commissions, stamp tax, borrowing interest... Short-term trading costs are much higher than long-term holding. Many traders' hard-earned profits are ultimately eaten up by fees.

**3. Huge time costs**
Day trading requires monitoring the market all day. From open to close, you must constantly watch price movements, order flow, real-time news—any oversight can cause missed exit opportunities.

**4. Emotional decision-making**
Short-term trading easily triggers overtrading. When the market moves in your favor, leverage pressure may cause premature profit-taking; when wrong, delayed stop-loss can lead to bigger losses, resulting in a "lose more, earn less" situation.

## Is it necessary to sell on the same day? Other T+0 options

If the costs or rules of day trading are too high or complicated, the Taiwan stock market also offers other tools that naturally support same-day buying and selling:

### Futures trading
Inherently T+0, known for leverage and two-way trading. Lower transaction costs but higher risk.

**Commission:** Transaction tax 0.02% on NT$100,000, other fees around NT$30

### Options trading
Derived from futures, with flexible contract execution. Risks are relatively controllable. Lower threshold—just pay the premium.

**Commission:** Transaction tax 0.1%, other fees around NT$10-20

### Contracts for Difference (CFD)(
No actual stock purchase, but trading price differences with brokers via contracts. Flexible leverage, lowest entry barrier.

**Commission:** Mainly spread costs

## Cost and risk comparison of different day trading methods

| Trading Method | Nature | Account Opening Requirements | Main Costs | Core Risks |
|----------------|---------|------------------------------|--------------|------------|
| Margin trading | Financing and short selling via broker | Credit account + capital requirements | Stamp tax 0.3% + commission + interest | Leverage risk, settlement risk |
| Spot trading | Own funds | Lowest threshold | Stamp tax 0.15% + commission | Market volatility, holding risk |
| Futures | Inherently T+0 | Margin required | Transaction tax + commission | Leverage amplification, expiry settlement |
| Options | Inherently T+0 | Low threshold | Transaction tax + commission | Leverage risk, time decay |
| CFD | Inherently T+0 | No significant threshold | Spread costs | Highest leverage risk |

## Which stocks can be day traded? When is the best time?

The Taiwan stock market allows day trading of about 200 stocks, including components of the Taiwan 50 Index, Mid-Cap 100 Index, and the FTSE Taiwan OTC Index. However, **not all stocks are open for day trading**—small-cap stocks and newly listed stocks are often restricted.

**Best times for day trading:**
- Opening hours: high volatility, good liquidity
- Closing hours: active trading volume
- Major news releases: price swings are intense

## Common questions about same-day buying and selling

**Q: Can odd-lot stocks be traded on the same day?**
A: No. Odd-lot stocks do not support credit trading and can only be sold the next day at the earliest.

**Q: Are there restrictions on US stock day trading?**
A: Yes. For regular accounts, no more than 3 trades within five days; if assets exceed US$25,000, no limit. If below, stock trading is frozen for 90 days.

**Q: Am I suitable for day trading?**
A: Day trading suits short-term investors who have: sufficient capital, sharp judgment, strong psychological resilience, and ample time to monitor the market. If funds are tight or risk tolerance is low, avoid day trading.

## Conclusion: Do you have to sell on the same day for day trading?

Simply put, **day trading means completing buy and sell transactions on the same day**, which is its fundamental definition. If you don’t sell on the same day, it’s not called day trading; it becomes overnight trading or swing trading.

The core appeal of day trading lies in quick stop-loss and avoiding overnight risk, but the price paid includes high costs, high leverage, and significant time investment. Whether to choose day trading ultimately depends on your capital, risk appetite, and whether you have enough time to watch the market.

For most retail investors, it’s wise to approach day trading cautiously until you fully understand market rhythms.