## Can day trading stocks really make money? Complete analysis of day trading tutorials, risks, and practical skills

### What is day trading? Why are more and more people choosing to settle within the same day

The term "day trading" is becoming increasingly popular in the stock market. In the Taiwan stock market, day trading volume accounts for nearly 40% of trading value. In the US stock market, due to the T+0 system, same-day settlement is the norm. However, most people only know the name but do not understand the essence of day trading—**completing buy and sell transactions within the same trading day, or selling first and buying back later, ensuring all positions are settled before market close**.

Buying and selling on the same day is called "buy-day trading"; if you short without holding shares first and buy back during the day, it’s called "sell-day trading." Since Taiwan’s Financial Supervisory Commission opened up stock day trading in 2016, this short-term entry and exit strategy to profit from price differences has gradually become a choice for active investors.

### Why are investors attracted to day trading? Three main superficial advantages

**1. Avoid overnight risk**

Taiwan stocks are influenced during trading hours (9:00-13:30) by international markets in Hong Kong, Europe, and the US. If there is major news the night before, stocks that are bullish may open sharply lower the next day. Day trading completes transactions during the day, and since no stock holdings are carried overnight, this completely avoids the "overnight risk."

**2. Increase capital turnover rate**

Multiple buy and sell transactions can be executed within the same day, only risking the price difference. Ideally, this greatly improves capital efficiency compared to long-term holding.

**3. Leverage amplification**

Taiwan stock margin trading for day trading requires an initial margin of about 50% (i.e., 2x leverage). In theory, a smaller principal can control a larger trading volume.

### But the traps of day trading are far more dangerous than its advantages

**Transaction fees and taxes are surprisingly high**

Although the government halved the day trading tax (from 0.3% to 0.15%), the costs under high-frequency trading are still significant. For example, if you make 5 trades in a day with a principal of NT$100,000 each, earning 0.5% (NT$500) per trade, after deducting fees and taxes, net profit might only be NT$100-200. A single loss can wipe out previous gains—this is the trap of "earning from price differences but losing on costs."

**Psychological and speed challenges**

Taiwan stocks often fluctuate 1%-2% rapidly during trading hours due to foreign investor movements, corporate announcements, and market sentiment. For day traders, these few minutes can determine win or lose. Constantly monitoring the market, making quick judgments on bullish or bearish signals, setting stop-loss and take-profit points—under high stress, it’s easy to "hesitate and miss" or "make impulsive mistakes." Inexperienced traders face risks far greater than potential gains.

**Leverage as a double-edged sword**

Using margin or short selling for day trading amplifies losses if the market reverses. For example, with NT$100,000 of capital and borrowing to buy NT$200,000 worth of stocks, a 5% decline results in a NT$10,000 loss (equivalent to 10% of the principal). In extreme situations like limit-up or limit-down, losses can escalate further, and traders may face margin calls from brokers.

**Easy to become addicted, gradually eroding capital**

"Immediate profit feedback" can make traders addicted to short-term gains, evolving from "trying" to "frequent trading," even placing orders based on feelings rather than market analysis. Ultimately, continuous small losses or a single large loss can consume time, energy, and gradually deplete the capital.

### Are you suitable for day trading? 5 self-assessment questions

Day trading is not suitable for everyone. If you lack any of the following, it’s recommended to observe first:

**Have ample time and can monitor the market throughout**—Day trading requires quick decision-making within a short period. Those who cannot focus fully on the market are likely to miss entry and exit points, leading to losses. Usually not suitable for office workers.

**Possess strict discipline and risk control skills**—Must set stop-loss points and enforce them, control position sizes, and avoid violating principles due to gambling mentality.

**Strong stress resistance and quick decision-making ability**—Market can swing significantly within minutes. Emotional reactions (panic selling, greed chasing highs) can be very dangerous.

**Have investment experience and technical analysis skills**—Need to interpret intraday charts, volume-price relationships, and use tools like moving averages, candlestick patterns, support and resistance levels. Beginners rushing into day trading often just pay tuition with their capital.

**Have sufficient funds to bear losses**—Day trading is not a guaranteed profit tool but a speculative method to leverage small capital for big gains. With limited capital and high leverage, the risk of liquidation is very high, and one mistake can wipe out the account.

### What are the five types of day trading methods

**Spot stock day trading**—Unique to Taiwan stock market, over 1,600 stocks can participate, no margin or short selling required.

**US stock intraday trading (Day Trading)**—Closing positions within the same day, no overnight holdings. If capital is less than $25,000, you can only do up to 3 day trades within 5 trading days; over $25,000, unlimited.

**Margin/short selling day trading**—Margin trading involves buying first and selling later; short selling involves borrowing shares to sell first and buy back later. Additional interest or borrowing fees apply, and there is a risk of short squeeze or lack of shares.

**Derivatives day trading**—Completing trades of stock index futures, options, or single stock futures within one day. Short-term traders often use Taiwan index futures for day trading due to high leverage and low costs, but it requires advanced skills.

**Algorithmic/high-frequency day trading**—Automated computer algorithms determine buy and sell points, aiming for small profits from high-frequency trades. Costs are low, but technical skills are high, making it difficult for retail traders to execute.

### Taiwan stock vs US stock day trading: rule comparison

| Item | US Stocks | Taiwan Stocks |
|-------|------------|--------------|
| Eligibility | No limit if assets > $25,000; up to 3 day trades if below | Unlimited same-day buy/sell; short selling requires a margin account |
| Trading hours | Mon-Fri 09:30-16:00 (Taiwan time 21:30-04:00) | Mon-Fri 09:00-13:30 |
| Pre-market/post-market trading | Allowed | Post-market can trade odd lots |
| Settlement | T+1 | T+2 |
| Price limit | None | 10% |
| Minimum trading unit | 1 share | 1 lot (1000 shares) |
| Clearing method | Continuous net settlement | Daily offset with rollover settlement |
| Fees/taxes | Most brokers have no commission; no securities transaction tax, but SEC/FINRA fees apply | Broker commissions + half-rate securities transaction tax (0.075%) |

### Practical day trading steps: from stock selection to exit

**Step 1: Carefully select stocks—"Popular" stocks**

Filter from thousands of stocks, focusing on those with popularity, high trading volume, and volatility:

Observe **news**—Stocks covered by media tend to attract investor attention. Positive or negative news can amplify daily fluctuations, creating opportunities.

Follow **institutional research reports**—Research from large investment firms can influence professional investors and institutions. Their moves are important trends for day traders.

Quantify **data indicators**—Monitor rankings of strong stocks, weak stocks, turnover rates, and trading volume, especially those with sudden volume increases (over 50% above the 5- or 10-day average).

**Step 2: Determine trading direction—Focus on previous high and low points**

Day trading requires analyzing **5-minute candlesticks** (each 5 minutes), different from daily K-line used in swing trading.

**Going long**: Pay attention to overall market momentum. If the market is weak, individual stocks may be dragged down; if a stock is clearly stronger than the market, consider holding longer, setting exit points near previous highs. For example, when going long on NIO, coordinate with Nasdaq 100 (NAS100).

**Shorting**: Also requires a bearish market environment. For example, during negative policy news about China, related stocks can be shorted intraday. In the case of Baidu (BIDU), if the market weakens at midnight but the stock remains strong, consider covering the short position promptly.

**Step 3: Discipline execution—Stop profit, stop loss, capital management**

**Set timely stop-loss and take-profit points, exit early**—It’s hard to buy at the lowest and sell at the highest. Setting stop-loss at around 2-3%, and take-profit at about 5% is reasonable. **Most importantly, do not hold until close**, as it may lead to unexecuted orders, margin calls, or losses from late-day sell-offs.

**Adequate capital management**—Since market direction can reverse, ensure sufficient funds are available. Trade with what you have; avoid excessive leverage.

**Decisive mindset, avoid stubbornness**—Enter trades decisively when opportunities arise, and exit promptly when profits or losses are realized. Abandon the mindset of "it can go higher," to minimize losses and maximize gains.

### Taiwan stock day trading cost estimate

For example, TSMC 100 lots (10 million shares) at NT$600 per share:

Transaction amount = 600 × 100,000,000 = NT$60 billion

Broker fee (assuming 30% discount) ≈ NT$60 billion × 0.04275% = NT$25,650,000

Securities transaction tax (halved for day trading) ≈ NT$60 billion × 0.075% = NT$45 million

**Main cost is trading tax**, accounting for most.

### US stock day trading cost estimate

For example, NVIDIA 1,000 shares at $1,000:

Transaction amount = $1,000 × 1,000 = $1,000,000

Broker fee: $0 (most brokers offer commission-free trading)

SEC/FINRA fees ≈ $0.000145 × 1,000 = $0.145

**US stock costs are less than $1**, but watch out for spread, slippage, and margin interest costs.

### Recommended stocks suitable for day trading in 2025

**Popular Taiwan stocks for day trading** (average daily trading volume in NT$ thousands)

| Stock | Code | Avg Daily Volume |
|--------|-------|------------------|
| TSMC | 2330 | 30,198 |
| Kang Pei | 6691 | 20,292 |
| Chuan Lake | 2059 | 8,801 |
| Innolux | 5371 | 19,721 |
| Creative | 3444 | 31,882 |
| Zhen Ding-KY | 4958 | 16,326 |
| Tung Yuan | 1504 | 19,053 |
| Guang Yu | 2328 | 27,726 |
| Solomon | 2359 | 5,398 |
| Hon Hai | 2317 | 49,552 |

**Popular US stocks for day trading** (average daily trading volume in USD thousands)

| Stock | Code | Avg Daily Volume |
|--------|-------|------------------|
| Amazon | AMZN | 41,339 |
| Tesla | TSLA | 98,241 |
| Microsoft | MSFT | 19,889 |
| Meta | META | 11,943 |
| NVIDIA | NVDA | 175,023 |
| AMD | AMD | 56,632 |
| Alphabet-Class C | GOOG | 24,419 |
| Exxon Mobil | XOM | 20,510 |
| Intel | INTC | 103,745 |
| Gilead Sciences | GILD | 75,258 |

These stocks have high daily liquidity, suitable for short-term day trading.

### Ultimate advice for day trading: Think carefully before acting

Day trading is one of many trading methods. Its advantages include high turnover and avoiding overnight international market volatility. But the risks are equally high—investors often leverage excessively to chase quick profits, exposing themselves to large risks; or overnight market swings cause gaps at open, making traders miss the price difference.

In reality, Taiwan stocks involve transaction fees and taxes on selling, making costs significantly higher than in the US. Increasingly, investors are turning to US stocks for day trading.

**Core advice**: Don’t be fooled by superficial advantages. Even with improved tutorials, the fact remains—most retail traders lose money in day trading. Start with small capital to test the waters, fully understand the risks, and only then consider if day trading is truly suitable for you.