Is it feasible to buy and sell stocks on the same day? A complete analysis of T+0 trading and day trading operations

The “Same-Day Clearing” Phenomenon in Today’s Stock Market

Many investors feel constrained by the traditional T+2 trading system — stocks bought today can only be sold the next day, and this delay often results in missed trading opportunities. In reality, stocks can be bought and sold on the same day, a practice known industry-wide as day trading or T+0 trading.

Since the opening of the Taiwan stock market in 2014, the volume of day trading transactions has accounted for nearly 40% of total Taiwan stock market trading, with the number of participants increasing year by year. This is not limited to stocks; futures, options, Contracts for Differences (CFD), and even cryptocurrencies all support same-day trading. However, stocks remain the most popular among day traders mainly because of sufficient liquidity, especially in tech stocks and small-cap stocks, which provide more abundant trading opportunities due to their price volatility.

The Essence of Day Trading: How to Achieve T+0 Under the T+2 System

The core concept of day trading is straightforward — completing buy and sell transactions within a very short period (the same trading day) to profit from price differences. Traders might buy TSMC shares at 9:15 AM and sell them at 2:30 PM.

Taiwan’s stock trading system originally operates on a T+2 basis (settlement occurs two business days after the transaction). So how is same-day trading possible? The answer lies in brokerage firms providing margin financing and securities lending services as intermediaries. Simply put:

An investor, optimistic about a stock in the morning, borrows funds from a broker to buy 100 lots; later in the afternoon, when they judge the stock has peaked, they sell those 100 lots. Legally, the system still follows T+2 settlement, but the investor has effectively completed buy and sell within the same day, with the broker charging additional financing, securities lending fees, and commissions during this process. For the investor, this achieves same-day entry and exit, which is the operational logic of stock day trading.

Physical Stock Day Trading vs Margin & Securities Lending Day Trading: Two Operational Paths

Physical Stock Day Trading

Using own funds for same-day trading, relatively straightforward.

Operation methods:

• Bullish view: buy stocks within the day → sell stocks within the day (long position)
• Bearish view: sell stocks within the day → buy stocks within the day (short position)

Account opening requirements:

• Broker account open for at least 3 months
• At least 10 transactions in the past year
• Sign risk disclosure and same-day clearing agreement

Cost structure:

• Stamp tax: 0.15%
• Commission: 0.1425%

Margin & Securities Lending Day Trading

Achieved through borrowing funds or securities to leverage. Margin day trading involves borrowing money; securities lending day trading involves borrowing stocks.

Operation methods:

• Bullish view: margin buy + securities lend sell (long)
• Bearish view: securities lend sell + margin buy (short)

Account opening requirements:

• Broker account open for at least 3 months
• At least 10 transactions in the past year
• Transaction amount over NT$250,000 in the past year
• Need to open a credit account

Cost structure:

• Stamp tax: 0.3%
• Commission: 0.1425%
• Average interest rate on borrowed funds: 0.08%

Opportunities and Hidden Risks of Stock Day Trading

Highlights that attract investors:

• Immediate stop-loss autonomy: No need to wait until the next day; if a mistake is identified, exit immediately to cut losses
• High capital turnover efficiency: Complete buy and sell within the same transaction, theoretically no capital occupation, and better capital utilization than traditional holding methods
• Avoid overnight risk: Prevent losses caused by overnight international news or sudden events leading to gaps
• Increased trading frequency: Short-term volatility can be fully exploited, creating more profit opportunities

Risks that require attention:

• Leverage as a double-edged sword: Looks like a no-capital operation but actually uses financial leverage, amplifying losses. Those with insufficient funds are most vulnerable to high risks; if investment fails or defaults occur, they face substantial debt.
• Over-leverage trap: Investors often use leverage beyond their capacity, leading to early take-profit due to leverage pressure even if the direction is correct, or failing to cut losses timely if the direction is wrong, ultimately resulting in huge losses and minimal gains.
• Trading costs erosion: Accumulated commissions and taxes can eat up most profits; short-term trading costs require careful attention.
• Time-consuming: Day trading demands monitoring the market all day, including individual stock movements, overall market fluctuations, capital flow changes, and real-time news, far more demanding than swing trading.

What Other Tools Support Same-Day Buying and Selling

Besides stocks via margin and securities lending, many financial products inherently support T+0 trading.

Futures

Futures are contracts where both parties agree to buy or sell a specific quantity of an underlying asset at a fixed price at a specified time. The futures market is highly speculative (about 96% of traders are speculators), with the main features being high leverage, two-way trading, and inherent support for T+0.

Account opening requirements: Deposit sufficient margin, traded in lots, typically requiring over NT$100,000 in margin.

Cost structure:

• Transaction tax: 0.02% of NT$100,000
• Commission: around NT$30 (varies by underlying)

Options

Options derive from futures concepts and are rights contracts — the holder has the right, within a certain period, to buy or sell the underlying at an agreed price, which can be exercised or abandoned. Unlike futures, options have optional exercise, rights are held by the buyer, and are naturally T+0.

Account opening requirements: Traded in lots, lower threshold than futures, only a few thousand NT$ in premium needed.

Cost structure:

• Transaction tax: 0.1%
• Commission: around NT$10+

Contracts for Differences (CFD)

CFD is a derivative contract between the client and broker, where investors pay margin to trade the underlying asset, earning the difference between buy and sell prices. Unlike futures and options, CFD does not involve ownership of the underlying asset, has no expiration settlement, can theoretically be held indefinitely, and is inherently T+0.

CFD covers a wide range of tradable assets — forex, gold, stock indices, individual stocks, oil, cryptocurrencies, etc.

Account opening requirements: Can be applied online with very low thresholds (tens to hundreds of USD).

Cost structure: Mainly the spread (difference between bid and ask prices).

Cost and Difficulty Comparison of the Five Major Day Trading Tools

Practical Operation Process for Same-Day Stock Trading

The logic of day trading is not complicated; the key is to judge the direction:

1. Long (buy expecting rise) — buy within the day + sell within the day
2. Short (expecting fall) — sell within the day + buy within the day

Different tools have different trading rules and costs. Taking CFD as an example, the operation steps are:

Step 1: Open an account on a trading platform Complete identity verification and fund deposit

Step 2: Select trading assets Find the stocks or other products you want to trade

Step 3: Conduct intra-day price analysis Judge the short-term trend of rise or fall

Step 4: Submit trading orders

• Bullish: click buy (long), close position within the day
• Bearish: click sell (short), close position within the day

Step 5: Set order conditions Set stop-loss prices to control risk

CFD’s advantage is that you do not need to purchase actual stocks, only use stocks as the investment target. Supports both long and short trading, flexible leverage, and very low thresholds — for example, trading 1 lot of Apple stock might only cost about $8. Because of this, CFD is highly suitable for short-term swing trading, but the risks also increase accordingly.

Common Questions from Investors

Q: Can odd-lot stocks be traded on the same day? No. Whether during or after trading hours, odd-lot stocks do not support margin trading, and can only be sold the next day at the earliest.

Q: Which stocks in Taiwan can be day traded? Components of the Taiwan 50 Index, the Mid-Cap 100 Index, and the FTSE Taiwan Top 50 Index (about 200 stocks) can be margin or physical day traded. Additionally, options, futures, and CFDs inherently support day trading. In the US stock market, a regular account can trade no more than 3 times within five days; with assets over $25,000, unlimited trading is allowed; below that, trading is frozen for 90 days.

Q: When is it suitable to engage in same-day trading? Day trading is usually conducted within short time frames, best during active and volatile market periods such as market open, close, or during major news releases.

Summary: Is Day Trading Suitable for You?

Same-day buy and sell is tailored for short-term investors. They aim to profit quickly by capturing market volatility or avoid overnight risk by choosing day trading.

The advantages of day trading include same-day settlement and relatively low costs, but the trade-off is the need for continuous market attention. If misjudged or risk management is poor, losses can escalate rapidly, even leading to default due to insufficient funds. Before deciding to engage in day trading, you should evaluate your judgment ability, risk tolerance, and psychological resilience, ensuring you are fully aware of potential losses.