Immediate Buy and Sell Investment Technique: The Complete Guide to T+0 Day Trading

What is Day Trading? A One-Sentence Explanation of T+0 Trading

Day trading means buying and selling on the same day, completing both transactions without waiting for the next day’s settlement. In Taiwan, stocks originally followed a T+2 trading system (buy today, sell after two days), but through broker-provided margin trading and short selling mechanisms, investors can settle transactions within the same day. The goal is to profit from price differences.

For example: buy TSMC (TSM) at 9:15 AM, sell at 2:30 PM, earning a 3% profit in between, and lock in the gains on the same day. This is the essence of day trading.

Taiwan Stock Market Day Trading Ecosystem: Why Are More and More People Choosing to Trade on the Same Day?

Since Taiwan opened up same-day stock trading in 2014, day trading volume has accounted for nearly 40% of total market turnover, with participant numbers increasing year by year. The main reasons attracting investors include:

Core Advantages of Day Trading:

• Close positions within the same day: no need to wait until the next day to cut losses or take profits, avoiding overnight risks
• No capital requirement for cash-only day trading: a buy-and-sell settlement system that theoretically doesn’t require waiting for T+2
• Avoid overnight holding risks: if market conditions turn unfavorable, sell immediately without being forced to hold overnight and face additional variables
• High liquidity in stocks, especially in tech stocks and small caps with large volatility, providing more short-term trading opportunities

Associated Risks and Costs:

• Leverage risks multiply: the essence of margin trading is using leverage; if judgment is wrong and stop-loss isn’t timely, losses can escalate quickly
• Trading costs eat into profits: round-trip commissions, taxes, and fees may erode small short-term gains
• Requires significant time investment: constant monitoring of market movements, order flow, real-time news—more complex than swing trading
• Psychological pressure: easy to cut profits too early due to leverage stress, or hold on too long out of greed

Cash-Only Day Trading vs Margin Trading: What Are the Differences?

Cash-Only Day Trading: Using own funds for same-day transactions

Operational Logic:

• Bullish: buy stocks on the same day → sell stocks on the same day
• Bearish: sell stocks on the same day → buy stocks on the same day

Account Opening Requirements:

1. Open a brokerage account for at least 3 months (not limited to a single broker)
2. Have at least 10 completed trades in the past year
3. Sign risk disclosure and same-day offset agreement

Cost Structure:

• Stamp tax: 0.15%
• Transaction fee (buy/sell): 0.1425%

Margin Trading and Short Selling: Borrowing money or stocks from brokers to trade

Using margin financing and short selling to execute same-day buy and sell. Margin financing involves borrowing money to buy stocks; short selling involves borrowing stocks to sell.

Operational Logic:

• Bullish: margin buy within the day → short sell borrowed stocks
• Bearish: short sell borrowed stocks within the day → margin buy to cover

Higher Account Opening Thresholds:

1. Open a brokerage account for at least 3 months
2. Have at least 10 completed trades in the past year
3. Have a trading volume of over NT$250,000 in the past year
4. Need to open a credit account

Cost Structure:

• Stamp tax: 0.3%
• Transaction fee: 0.1425%
• Loan interest rate (average): 0.08%

Comparison: Margin trading costs are slightly higher but offer greater leverage and flexibility; cash-only trading costs are lower but require more capital.

Besides Stocks, What Other Instruments Allow Same-Day Trading?

In Taiwan, cash trading in stocks relies on broker intermediaries and margin mechanisms, but many derivatives markets are inherently T+0, often with lower costs.

Futures: 96% of traders are speculators

Futures are naturally T+0, allowing unlimited trades within the same day. Features include high leverage and two-way trading, with contracts measured in units. Usually, tens of thousands of NT dollars in margin are needed to start trading.

Costs:

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

Options: Low premium, high leverage flexibility

Options are also inherently T+0, requiring only a small premium (a few thousand NT dollars) to participate. The buyer holds the right to exercise or abandon the option.

Costs:

• Transaction tax: 0.1%
• Fees: around NT$10+ per trade

Contracts for Difference (CFD): The lowest threshold day trading tool

CFD is a contract between the client and broker to trade underlying assets without owning the actual asset. It covers forex, gold, stock indices, individual stocks, oil, and even cryptocurrencies. It’s inherently T+0, with very low account opening thresholds (from a few tens to hundreds of dollars), but spreads vary.

Quick Comparison Table of the Five Trading Tools

Practical Steps for Day Trading

Regardless of the instrument chosen, the basic process of day trading is consistent:

Step 1: Select the Trading Asset
Decide on stocks, futures, or other financial products.

Step 2: Market Analysis and Judgment
Perform technical, fundamental, or order flow analysis to forecast short-term trends.

Step 3: Confirm Trading Direction

• Bullish → buy (go long)
• Bearish → sell (go short)

Step 4: Set Risk Parameters
Establish stop-loss prices to control individual trade losses. This is the most critical step in day trading.

Step 5: Close Positions Within the Day
Complete offsetting operations during the trading day or before market close to end the day’s trading.

Common Q&A About Day Trading

Q: Can odd-lot stocks be bought and sold on the same day?
A: No. Odd-lot stocks do not support margin trading, and the fastest you can sell is the next day.

Q: Which stocks in Taiwan can be day traded?
A: About 200 stocks including Taiwan 50 Index, Mid-Cap 100 Index components, and OTC 50 Index stocks. For futures, options, or CFDs, the range of underlying assets is broader.

Q: When is the best time for day trading?
A: During high volatility periods, including market open, before close, and around major news releases.

Q: Are there restrictions on US stock day trading?
A: Regular accounts can make no more than 3 trades within five business days; accounts with over US$25,000 in assets have no restrictions; below that, stock trading is frozen for 90 days.

Summary: Is Same-Day Trading Suitable for You?

Day trading is suitable for short-term investors and traders who want to avoid overnight risks, but it requires meeting several conditions:

✓ Sufficient time to monitor market changes
✓ Solid technical analysis skills
✓ Strict risk management discipline
✓ Strong psychological resilience
✓ Adequate trading capital

If you just want quick wealth or cannot dedicate long hours to market watching, day trading may not be the best choice. However, if you meet the above conditions and gain experience through simulated trading, day trading indeed offers a way to profit quickly from market volatility. The key is to recognize your own capabilities, choose suitable tools, and strictly follow trading discipline.