Can US stocks be used as collateral? Analyzing the truth and opportunities of intraday trading in the US stock market

Investors often face a dilemma: should they hold long-term like Buffett, or capture market opportunities through short-term trading? As global markets become more volatile, more people are paying attention to “day trading” methods. So, can U.S. stocks be day traded? The answer is yes — not only can they, but the day trading mechanism in U.S. markets offers unique advantages over Taiwan stocks. This article will give you an in-depth look at the full picture of intraday trading in U.S. stocks and whether this high-risk, high-reward approach suits you.

Why is U.S. stock day trading popular? The core advantage of T+0 trading system

To understand why U.S. stock day trading is so attractive, first, you need to know about the “T+0” settlement system used in the U.S. markets. Simply put, T+0 means investors can buy and sell the same stock within the same trading day, with funds available immediately for the next trade.

In contrast, Taiwan stocks use a “T+2” system, where after selling stocks today, you must wait until the day after tomorrow to withdraw funds. This difference fundamentally changes the trading experience. In the U.S., you can execute multiple trades within a single day without waiting for settlement, greatly improving capital efficiency.

Additionally, U.S. markets have longer trading hours. Regular trading runs from 09:30 to 16:00 Eastern Time (which is 21:30 to 04:00 Taiwan time). With high trading volume and liquidity, even during rapid market swings, investors can more easily enter and exit positions.

Comparing U.S. vs. Taiwan day trading rules: System differences at a glance

There are significant differences in the rules for day trading between the U.S. and Taiwan, directly affecting how investors operate and their costs.

Capital requirements are the most critical difference. In the U.S., to engage in day trading (Pattern Day Trader), you must meet the “PDT rule.” Specifically, if your account has less than $25,000, you can only make up to 3 day trades within 5 trading days; if your account exceeds $25,000, there are no restrictions on day trading. This rule is set by the SEC and FINRA to protect small investors. In Taiwan, there are no such restrictions on buying and then selling the same stock (day trading), but short selling (selling first, then buying back) requires a margin account.

Trading hours and pre-market/after-hours trading also differ. The U.S. allows trading before and after regular hours, providing more opportunities for day traders. Taiwan mainly focuses on regular trading hours, with after-hours trading limited to odd-lot transactions.

Minimum trading units differ as well. U.S. stocks are traded in whole shares (1 share minimum), allowing flexible position sizing. Taiwan stocks are traded in lots of 1,000 shares (1 “lot”), though after-hours trading offers odd-lot options, during regular hours, the lot size remains 1,000 shares.

Settlement time: U.S. stocks settle T+1, while Taiwan stocks settle T+2, affecting how quickly funds are available.

Four major risks of U.S. stock day trading: high returns come with traps

While U.S. stock day trading is attractive, it carries significant risks.

First, trading costs. Most U.S. brokers now offer commission-free trading, but investors still pay SEC and FINRA fees, which are usually minimal per trade. However, frequent trading can accumulate costs. More importantly, currency exchange costs come into play when converting TWD to USD, and exchange rate fluctuations can eat into profits. Taiwan’s trading taxes are halved for day trading (from 0.3% to 0.15%), so the actual tax burden may not be higher than hidden costs in U.S. trading.

Second, high time pressure and decision risks. U.S. markets fluctuate rapidly, especially at open and close. Traders need to quickly judge market direction, set stop-loss and take-profit points, and execute trades swiftly. Inexperienced traders may make impulsive decisions leading to losses. The mental stress of watching markets for hours can be substantial, especially when market moves go against expectations, leading to panic selling or chasing gains.

Third, leverage amplification. Many day traders use margin to boost returns. U.S. margin requirements are typically 50% (2x leverage). If the market moves against you, losses are magnified. For example, using $10,000 of margin to buy $20,000 worth of stock, a 5% decline results in a $1,000 loss, which is 10% of your initial capital. In extreme cases (e.g., hitting a limit up with no way to close position), losses can escalate further, and broker margin calls may force liquidation.

Finally, psychological addiction risk. The instant feedback of profits in day trading can be addictive. Many start with casual trades but develop compulsive, frequent trading habits, ignoring market rhythm, and trading on gut feelings, which can lead to continuous small losses or large single trades wiping out capital.

Who is suitable for U.S. stock day trading? Five self-assessment questions

Before jumping into U.S. day trading, investors should honestly evaluate if they meet these conditions:

1. Ample time and ability to monitor markets. U.S. markets are volatile and fast-moving. If your work prevents you from paying attention during trading hours (21:30–04:00 Taiwan time), day trading may not be suitable.

2. Strict discipline and risk management skills. Day trading requires setting and executing stop-loss and take-profit orders without deviation. You need to analyze position sizes, overall risk, and stick to your plan calmly.

3. Strong stress resistance and quick decision-making. Market swings can be sudden. If you are prone to emotional reactions to volatility, day trading may worsen these behaviors.

4. Investment experience and technical analysis skills. Day trading is highly technical. You should understand intraday charts, volume-price relationships, moving averages, candlestick patterns, support/resistance levels, etc. Without basic investment knowledge, entering day trading is like paying tuition with your capital.

5. Sufficient capital and risk tolerance. Day trading is speculative and not a guaranteed way to make money. Small capital combined with high leverage increases the risk of liquidation. Only those with ample funds should consider it.

Three steps for U.S. intraday trading: from stock selection to exit discipline

If you’ve confirmed you’re suitable, here are three core steps for practical trading.

Step 1: Select high-liquidity stocks

The first task is choosing “popular” stocks with high liquidity. Focus on these three aspects:

News and media. Stocks with recent news—positive or negative—tend to attract attention and can amplify intraday volatility. For example, a tech company launching a new product, facing regulatory scrutiny, or releasing earnings surprises can create significant movement.

Institutional research reports. When major banks or research firms publish reports, institutional investors may rebalance holdings, causing short-term volatility. Day traders should monitor these signals.

Quantitative indicators. Track daily top gainers, losers, and volume leaders. Stocks with trading volume spikes over 50% above their 5- or 10-day average often have larger intraday swings.

Step 2: Determine trading direction and entry timing

U.S. day trading can go long or short. When going long, watch previous lows and opening prices, and pay attention to overall market trend. Since day trading uses 5-minute charts (not daily), decisions must be made within shorter timeframes.

Market momentum is crucial. If the overall market (e.g., NASDAQ 100, S&P 500) is weak, even strong individual stocks may underperform. Conversely, a bullish market supports stock gains. Use major indices as a reference.

Shorting requires a bearish market environment. For example, geopolitical events or sector-specific downturns increase shorting success probability.

Step 3: Strictly execute stop-loss, take-profit, and capital management

This is key to success or failure in day trading. Recommended rules:

Set timely stop-loss and take-profit points. For example, aim for 5% profit targets and 2–3% stop-loss limits. Always close positions before market close to avoid overnight risk. As markets tend to be more volatile near close, leaving positions overnight can be dangerous.

Maintain sufficient capital. Day trading requires flexibility to cut losses or adjust positions. Keep enough cash in your account to avoid margin calls.

Be decisive and avoid greed. When a trade hits your target, exit promptly. Don’t hold on hoping for more; this often leads to reversals and losses.

Popular stocks and screening strategies for U.S. day trading

Active, suitable stocks for day trading include:

Tech giants remain favorites. NVIDIA (NVDA) with an average daily volume of $175 million, is a top choice for AI chips with high volatility and liquidity; Microsoft (MSFT), Amazon (AMZN), Alphabet (GOOG) all have daily volumes over $15 billion, suitable for short-term trades. Meta (META) with $11.9 billion average volume also offers high volatility.

Semiconductors are preferred. Besides NVIDIA, AMD (AMD) with $56.6 million daily volume, Intel (INTC) with $103.7 million, are highly active.

Energy and healthcare stocks are also notable. Exxon Mobil (XOM) with $20.5 million daily volume, Gilead Sciences (GILD) with $75.3 million, often move on energy policies or R&D news.

Tesla (TSLA). With nearly $98.2 million daily volume, is a favorite for short-term traders due to its high volatility.

These stocks have high liquidity and trading volume, making them prime candidates for day trading. But choosing the right stock is just the first step; execution discipline is equally critical.

Building the right mindset for U.S. day trading: staying rational amid high risks

The biggest enemy in U.S. day trading is often the trader’s own psychology.

Overcome panic. When markets fall sharply, many traders panic and sell at unfavorable prices. Pre-set stop-loss orders help enforce discipline.

Resist greed. When profits accumulate, the temptation to hold for more can backfire. Remember, consistent 5% gains are better than risking a 15% loss chasing bigger returns.

Respect market rhythm. Sometimes, the best decision is to wait. Don’t trade just for the sake of trading; wait for high-probability setups.

Review and improve. Keep a trading journal, record each trade’s rationale and outcome, and regularly analyze to identify weaknesses and refine your strategy.

Final thoughts: Is U.S. stock day trading feasible?

Can U.S. stocks be day traded? Yes, but many conditions must be met. The T+0 settlement, liquidity, diverse stock options, and extended trading hours create favorable conditions. Compared to Taiwan’s T+2 system and trading taxes, U.S. day trading has clear institutional advantages.

However, the system alone doesn’t guarantee success. U.S. stock day trading remains a high-risk, high-pressure activity. Only those with sufficient time, discipline, skills, and capital should consider it. For most, the question isn’t whether they can day trade, but whether they should.

If you’re interested, start small, gain experience through practice, and remember: day trading isn’t a quick path to wealth but a professional trading approach. Used correctly, it offers opportunities; misused, it amplifies risks. The power is in your hands—make rational decisions.