Can you buy and sell US stocks on the same day? An in-depth analysis of the truth behind day trading and a practical guide

The Essence of Day Trading: Why Are More and More Investors Choosing This Path?

The so-called “day trading” simply means completing buy and sell transactions within the same trading day (or selling first and buying later), ensuring all positions are settled before the market closes. It sounds simple, but the underlying logic is worth a deep dive.

As market volatility intensifies, traditional long-term holding strategies can no longer meet all investors’ needs. According to statistics, day trading accounts for nearly 40% of trading volume in the Taiwan stock market, while in the US stock market, the adoption of the T+0 system (real-time settlement) allows investors to complete buy and sell transactions within the same day, offering much higher flexibility than Taiwan stocks. So, can you buy and sell on the same day in the US stock market? The answer is yes—this is the core advantage that attracts short-term traders to the US market.

Advantages of Same-Day Trading System in the US Stock Market

The US stock market implements a T+0 settlement system, meaning that stocks bought today can be sold at any time within the same trading day without waiting for funds to settle. This contrasts sharply with Taiwan’s T+2 system (where the broker deducts funds or makes payments on the second business day after the transaction).

This system offers three core advantages:

1. Avoid Overnight International Market Risks

Taiwan stocks open from 9:00 am to 1:30 pm, during which they are continuously influenced by news from Hong Kong, Europe, the US, and other international markets. Many investors have experienced: significant international market news overnight, and when the market opens the next day, stocks that looked bullish suddenly gap down sharply. Day trading through intra-day buy and sell, and closing all positions after the market, effectively avoids such “overnight risks.”

2. Improve Capital Turnover Efficiency

Day trading allows investors to enter and exit multiple times within the same day, only bearing the risk of price differences. Ideally, this can significantly increase capital turnover rate, thereby amplifying profit potential. For example, with a principal of NT$100,000, day trading might involve multiple transactions within a day, achieving higher turnover efficiency compared to traditional holding methods.

3. Leverage Amplification Mechanism

Since day trading only requires paying the price difference rather than the full amount, the transaction value can exceed the actual capital. However, while profits are amplified, so are losses—this is a double-edged sword that requires cautious handling by investors.

Core Differences Between Taiwan and US Day Trading Rules

Although both support day trading, the rules differ greatly:

Capital Requirements

• US: Capital ≥ $25,000 allows unlimited day trading; below this, a maximum of 3 day trades within 5 trading days (PDT rule)
• Taiwan: No limit on buying first and selling later; selling first and buying later requires opening a margin account

Trading Hours

• US: Monday to Friday, 09:30-16:00 Eastern Time (Taiwan Time 21:30-04:00)
• Taiwan: Monday to Friday, 09:00-13:30, after-hours trading available for odd lots

Settlement Mechanism

• US: T+1 settlement
• Taiwan: T+2 settlement

Price Limit

• US: No limit
• Taiwan: ±10%

Minimum Trading Unit

• US: 1 share
• Taiwan: 1 lot (1,000 shares), odd lots tradable after hours

Fees and Taxes

• US: No securities transaction tax, most brokers offer commission-free trading, only SEC/FINRA fees (~$0.000145/share)
• Taiwan: Broker fee 0.1425%, day trading securities transaction tax halved to 0.075%, relatively higher overall costs

Real Risks of Day Trading: The Trap Behind Seemingly Profitable Gains

Many beginners are tempted by high returns from day trading but overlook hidden risks:

1. Hidden Transaction Costs Erode Long-term Profits

Taking Taiwan stocks as an example, if you make 5 trades in a day, each with NT$100,000 principal, earning 0.5% per trade (NT$500), after deducting fees and taxes, net profit might only be NT$100-200. If one trade incurs a small loss, previous gains can be wiped out by costs. Over time, many investors fall into the cycle of “profit from price difference, lose on costs.”

2. High-Pressure Decision Making in Short Timeframes

Taiwan stocks often experience 1%-2% rapid fluctuations during trading hours due to foreign investor movements, industry news, and market sentiment. For day traders, such volatility can determine the outcome within minutes. This requires investors to monitor the market intensely and make quick judgments on trend direction, setting stop-loss and take-profit levels. Under high stress, hesitation can cause missed opportunities or impulsive mistakes—especially for inexperienced traders, where short-term volatility risks outweigh potential gains.

3. Leverage as a Double-Edged Sword

Many investors use margin (long) or short selling for day trading, but leverage is a double-edged sword. Taiwan margin trading for day trading typically requires about 50% initial margin (2x leverage). If the market reverses, losses are magnified. For example, with NT$100,000 principal, borrowing NT$100,000 to buy NT$200,000 worth of stocks, a 5% decline results in a NT$10,000 loss (10% of principal). In extreme cases (e.g., hitting limit down or up with no chance to close position), losses can escalate further, and brokers may demand additional margin.

4. Psychological Addiction

The immediate feedback of profits from day trading can lead to addiction to the thrill of short-term gains, causing traders to neglect long-term investment performance. Many shift from “experimental trading” to “frequent trading,” placing orders based on feelings rather than analysis, ultimately wasting time and capital through continuous small losses or a single large loss.

Are You Suitable for Day Trading? Self-Assessment Checklist

Day trading is a highly professional and risky approach, not suitable for all investors:

Time Commitment: Can you monitor the market throughout the trading session? For office workers or those unable to watch the market in real-time, the risk is very high.

Discipline and Execution: Can you strictly follow stop-loss rules and risk management? Those with weak psychological resilience may add to losses when facing downturns.

Stress Resistance: Large swings every minute are normal; if you are easily emotionally affected, it’s very dangerous.

Technical Analysis Skills: Ability to interpret intraday charts, volume-price relationships, and familiarity with tools like moving averages, candlestick patterns, support/resistance levels. Beginners should avoid impulsive day trading to prevent costly lessons.

Capital Size: Sufficient funds to withstand potential losses, not just minimal capital. Day trading is not a guaranteed profit tool but a speculative method with high risk.

Diverse Methods of Day Trading

Depending on the trading targets and mechanisms, day trading can be divided into five main types:

Spot Stock Day Trading: The most basic form, buying and selling physical stocks directly. Over 1,600 stocks in Taiwan support spot day trading.

US Intraday Trading: Closing positions within the same day without holding overnight. US intraday trading is subject to PDT rules.

Margin and Short Selling Day Trading: Using margin to buy and sell on the same day, or borrowing stocks to short and buy back within the same day. Be aware of interest on margin, borrowing costs, and the risk of insufficient stocks in hot sectors.

Derivatives Day Trading: Completing trades of stock index futures, options, single-stock futures, and options within a trading day. Many short-term traders prefer Taiwan index futures for day trading due to leverage and low costs.

Algorithmic / High-Frequency Day Trading: Using automated computer algorithms to identify buy/sell points, focusing on small profits from high-frequency trades. Costs are low but require advanced technical skills; generally difficult for beginners.

Three Core Steps for Practical Trading

Step 1: Precisely Select Day Trading Targets

Success in day trading hinges on choosing the right stocks. The key is “popularity,” i.e., high trading volume and liquidity.

Observation dimensions include: news (media reports attracting investor attention), research reports (institutional movements guiding large capital flows), quantitative indicators (ranking of strong stocks, weak stocks, turnover rate, trading volume, especially those with a sudden increase of over 50%).

Step 2: Determine Trading Direction and Timing

Day trading can be long or short. Going long involves “trend-following” or “buying on dips/support.”

Focus on previous lows and opening prices, and analyze 5-minute K-line charts (each 5-minute bar) rather than daily charts. When going long, pay attention to overall market momentum; if the market weakens, individual stocks are likely to be dragged down.

For short positions, a bearish market sentiment is needed. For example, if the market weakens overnight but a stock shows relative strength, consider covering. The key judgment is: if the market hits a new low but the stock’s low is higher than the previous low—this usually indicates relative strength and a good opportunity to cover.

Step 3: Execute Trading Discipline

Spot day trading demands high overall capability; discipline is the key to success or failure.

Timely Take Profit and Cut Loss: It’s hard to buy at the lowest and sell at the highest, so set reasonable stop-loss and take-profit levels. Generally, 5% for take-profit and 2-3% for stop-loss are reasonable. Importantly, avoid trading near market close: late selling may result in unfilled orders, turning stocks into inventory requiring settlement; and as the market approaches close, selling pressure increases, risking a “market close dump.”

Capital Management: Day trading involves same-day buy and sell, but if the market moves against you, you may need to hold positions. Ensure sufficient funds are available. The principle is: trade with what you can afford to lose.

Psychological Adjustment: The two most important mental qualities for day trading are decisiveness and non-greed. Decisiveness means entering quickly when opportunities arise; non-greed means exiting promptly whether in profit or loss. Only with these can you minimize losses and achieve stable gains.

Selected Day Trading Targets in Taiwan and US Markets

Taiwan Stocks Suitable for Day Trading in 2025

Based on average daily trading volume, the following stocks are active and highly liquid:

TSMC (2330): average daily volume NT$30,198K, Kang Pei (6919): NT$20,292K, Chuan Lake (2059): NT$19,801K, Epistar (2448): NT$19,721K, Creative (3443): NT$18,882K, Zhen Ding-KY (4958): NT$16,326K, TECO (1504): NT$19,053K, Guangyu (2328): NT$27,726K, Solomon (2359): NT$5,398K, Hon Hai (2317): NT$49,552K.

US Stocks Suitable for Day Trading in 2025

US day trading targets should be large-cap stocks with high liquidity and moderate volatility. Common recommendations include:

Amazon (AMZN): average daily volume $41,339K, Tesla (TSLA): $98,241K, Microsoft (MSFT): $19,889K, Meta (META): $11,943K, NVIDIA (NVDA): $175,023K, AMD (AMD): $56,632K, Alphabet - Class C (GOOG): $24,419K, Exxon Mobil (XOM): $20,510K, Intel (INTC): $103,745K, Gilead Sciences (GILD): $75,258K.

These stocks have high daily volume, ample liquidity, and relatively stable volatility, making them suitable for short-term day trading.

Cost Comparison Analysis

Taiwan Day Trading Cost Example

Buying 100 lots (10 million shares) of TSMC at NT$600:

• Transaction amount = 600 × 100,000,000 = NT$60 billion
• Broker fee (assumed 30%) ≈ NT$60B × 0.04275% = NT$25,650
• Securities transaction tax (halved for day trading) ≈ NT$60B × 0.075% = NT$45 million
• Total cost approximately NT$700,000

Main cost is the transaction tax, which accounts for the largest proportion.

US Day Trading Cost Example

Buying 1,000 shares of NVIDIA (NVDA) at $1,000:

• Transaction amount = 1,000 × $1,000 = $1 million
• Broker fee: mostly zero (many brokers offer commission-free trading)
• SEC/FINRA fee ≈ 0.000145 × 1,000 = $0.145
• Total cost less than $1

US day trading costs are significantly lower, but traders must consider spreads, slippage, and borrowing interest.

Final Reflection

Day trading is a form of short-term trading that offers advantages like increased turnover and avoiding overnight risks. The US system’s ability to buy and sell within the same day makes it increasingly popular among short-term traders.

However, it is also a high-risk activity. Many traders chase quick profits by leveraging more and ignoring risk management. Additionally, overnight international market fluctuations can cause gaps at the next open, which are critical considerations for day traders.

Taiwan stocks involve higher costs due to transaction fees and taxes, making them less cost-efficient for day trading. The US market, with its T+0 settlement and commission-free trading, is becoming the new battleground for day traders. Ultimately, whether to trade in which market and whether day trading suits you depends on your capital, time, psychological resilience, and risk tolerance.