## Day Trading Is Popular Now, But Is It Really Suitable for You?

Stocks can be bought and sold today, which is commonly known as **day trading**—also called **T+0 trading** or **intraday clearing**. Since Taiwan stocks opened up to day trading in 2014, the trading volume has accounted for nearly 40% of total turnover, and the number of participants has grown every year. But behind this wave, what are the actual pitfalls?

Many are attracted to day trading because it appears to be a "no-capital" business—buy and sell within the same day to settle quickly, without waiting for the next day’s settlement. However, in reality, this trading method requires high market sensitivity and risk tolerance, as leverage risks, time costs, and psychological pressures are far greater than traditional swing trading.

## What Exactly Is Day Trading? Explained in One Sentence

The core of **intraday clearing** is: using the margin trading and short selling services provided by brokers, within the T+2 trading system, to buy and sell the same stock on the same day to profit from price differences.

For example: Suppose you are bullish on TSMC (TSM). In the morning at 9:15, you buy 100 lots on margin; in the afternoon at 2:30, you sell the same 100 lots on short sale. On the surface, you just completed one transaction, but the broker can charge financing fees, short selling fees, and commissions through this operation. For traders, this achieves the goal of buying and selling within the same day—**intraday clearing**.

## Cash Day Trading vs Margin Day Trading: How to Choose?

### Cash Day Trading: Lower threshold, using only own funds

**Account Opening Requirements**:
1. Open an account with a broker for at least 3 months
2. Complete more than 10 buy/sell transactions in the past year
3. Sign risk disclosure and intraday clearing agreement

**Fee Structure**:
- Securities transaction tax: 0.15%
- Commission: 0.1425%

**Trading Methods**:
- Bullish: Buy stocks today + sell stocks today
- Bearish: Sell stocks today + buy stocks today

**Features**: No borrowing of money or stocks, relatively simple operation, but requires higher own capital.

### Margin Day Trading: Greater leverage, higher risk

**Account Opening Requirements**:
1. Open an account with a broker for at least 3 months
2. Complete more than 10 buy/sell transactions in the past year
3. Total transaction amount over NT$250,000 in the past year
4. Must open a credit account

**Fee Structure**:
- Securities transaction tax: 0.3%
- Commission: 0.1425%
- Loan interest rate (average): 0.08%

**Trading Methods**:
- Long: Margin buy + short sell
- Short: Short sell + margin buy

**Features**: Borrow money or stocks, can leverage smaller capital to control larger positions, but costs and risks double.

## The Truth About Intraday Clearing: Pros and Cons

### Three Major Benefits

**① Timely stop-loss, no overnight risk**
In traditional trading, if you misjudge, you can only sell the next day, risking additional losses during that period. Day trading allows immediate closing of positions, avoiding systemic risks of overnight holdings.

**② No need for long-term holding funds**
Buy and sell within the same day, with high capital efficiency. In theory, the same capital can be used multiple times within a day.

**③ Quick profits from short-term volatility**
Markets fluctuate daily, especially tech stocks and small caps with large intraday swings. Day traders can seize these opportunities.

### Three Major Hidden Risks

**① Extremely high time and effort costs**
Day trading requires monitoring the market all day, paying attention to individual stock trends, overall market movements, capital flow changes, and real-time news—much more demanding than swing trading. Mistakes can lead to rapid losses.

**② Leverage risk is seriously underestimated**
Many are attracted by "no-capital day trading," but in fact, it involves high leverage. If the market moves in your favor, good; if not, and emotional stop-loss is not timely, losses can escalate quickly. Worse, insufficient funds can lead to failure to settle, facing default risks.

**③ Fees and taxes eat into profits**
The combined costs of commissions, transaction tax, and interest for day trading can be significant (margin trading and short selling combined rate exceeds 0.5%), meaning you need to earn enough price difference in a very short time to cover these costs. Slight misjudgment can wipe out your profits.

## Not Just Stocks: Other Tools for Intraday Trading

In Taiwan, stock intraday trading requires broker margin services, but other markets are naturally T+0, with completely different cost and risk structures.

### Futures: Naturally T+0, maximum leverage

**Account Opening**: Deposit NT$100,000+ to start trading

**Costs**:
- Transaction tax: 0.02% of NT$100,000
- Commission: around NT$30

**Features**: 96% of futures traders are speculators; leverage can reach over 10 times, with intense intraday volatility. For professional traders, risks are manageable, but beginners can easily get margin calls.

### Options: Lowest cost, but more complex

**Account Opening**: Just a few thousand NT$ premium

**Costs**:
- Transaction tax: 0.1%
- Commission: around NT$10+

**Features**: Options are rights, not obligations, and do not necessarily need to be exercised. Low cost but complex pricing, highest understanding difficulty for beginners.

### Contracts for Difference (CFD): Lowest barrier, most options

**Account Opening**: A few tens to hundreds of dollars

**Costs**: Mainly spread costs, lower transaction taxes

**Features**: CFDs cover stocks, forex, gold, oil, cryptocurrencies, and more. Flexible leverage, no actual stock delivery involved, can theoretically hold positions indefinitely. Especially suitable for short-term swing trading.

## Comparison of Five Intraday Trading Tools

| Comparison Item | Margin Day Trading | Cash Day Trading | Futures | Options | CFD |
|------------------|---------------------|------------------|---------|---------|-----|
| **Trading Nature** | Margin trading | Own funds | Naturally T+0 | Naturally T+0 | Naturally T+0 |
| **Account Opening** | 3 months + 10 trades + NT$250,000+ | 3 months + 10 trades | Tens of thousands deposit | Several thousand premium | Tens to hundreds USD |
| **Intraday Fee Rate** | 0.3% tax + 0.1425% commission + 0.08% interest | 0.15% tax + 0.1425% commission | 2/100,000 tax + NT$30 commission | 1/1000 tax + NT$10+ commission | Spread cost |
| **Main Risks** | Leverage + overnight risk | Market fluctuation + insufficient funds | Margin call risk | Margin call risk | Margin call risk |

## How to Do Intraday Trading? Practical Steps

Regardless of the tool used, the logic of intraday trading is simple:

**Step 1**: Choose the trading target and platform

**Step 2**: Find the asset you want to trade (stocks, futures contracts, options, or CFDs)

**Step 3**: Conduct intraday price analysis and judgment

**Step 4**: Place orders
- Bullish → Buy (long), close position within the day
- Bearish → Sell (short), close position within the day

**Step 5**: Set stop-loss and take-profit levels to control risk

## Frequently Asked Questions

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

**Q: Which stocks in Taiwan can be day traded?**
A: Currently, about 200 stocks including Taiwan 50 Index, Mid-Cap 100 Index components, and the FTSE Taiwan Top 50 Index. Futures, options, and CFDs have no such restrictions.

**Q: When is the best time for intraday trading?**
A: During market open (high volatility), close (rapid capital inflow/outflow), and major news releases—these periods have the highest volatility and trading opportunities.

## Final Advice

Intraday trading is not a magic formula for quick profits but a test of patience, judgment, and risk management. It suits investors who have ample time to monitor the market, are highly sensitive to market movements, and can withstand significant psychological pressure.

If you just want to participate in the market but lack time and experience, traditional swing trading or long-term holding strategies may be more suitable. The high returns of day trading come with equally high risks and costs. Before choosing, ask yourself: Can I monitor the market 8 hours every day? Can I stay rational when facing losses? Do I have enough capital to handle leverage risks?

Only those who answer "yes" to all these questions should step into the world of intraday trading.