Can You Buy and Sell Stock in the Same Day? | The Motley Fool (2024)

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Can You Buy and Sell Stock in the Same Day? | The Motley Fool? ›

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Absolutely, you can buy and sell stocks within the same trading day. This dynamic strategy, known as day trading, is an integral part of the financial landscape and serves as the lifeblood for many traders.

You can buy the same stock back at any time, and this has no bearing on the sale you have made for profit. Rules only dictate that you pay taxes on any profit you make from assets. To profit in stocks, means that you make rich rewards. Any gains that you make are taxed in India, and profit translates to paying taxes.

Yes, options can be traded intraday, which means opening and closing the positions within the same trading day. Intraday traders use technical analysis and market trends to identify short-term price movements in options contracts to generate profits.

The Motley Fool sells stock regularly, too

We regularly give "sell" recommendations to our members and often for one of the reasons described above. There can be several valid reasons to sell a stock, and many long-term-focused investors frequently have reasons to offload parts of their holdings.

While conditions and restrictions may apply, you can sell a stock immediately after buying it. Selling and buying back same stock is a common approach used by day traders.

Traders that follow the 10 a.m. rule think a stock's price trajectory is relatively set for the day by the end of that half-hour. For example, if a stock closed at $40 the previous day, opened at $42 the next, and reached $43 by 10 a.m., this would indicate that the stock is likely to remain above $42 by market close.

Day trading is not illegal when it is done within normal trade hours and properly recorded. However, a similar practice known as late day trading is illegal and can be prosecuted under commodities fraud law.

In general, as long as you adhere to the rules of the Financial Industry Regulation Authority (FIRNA), you can buy and sell stocks as frequently as you like.

With a $10,000 account, a good day might bring in a five percent gain, which is $500. However, day traders also need to consider fixed costs such as commissions charged by brokers. These commissions can eat into profits, and day traders need to earn enough to overcome these fees [2].

Is option selling always profitable? ›

When you sell an option, the most you can profit is the price of the premium collected, but often there is unlimited downside potential. When you purchase an option, your upside can be unlimited, and the most you can lose is the cost of the options premium.

DEFINITION: A straddle is a trading strategy that involves options. To use a straddle, a trader buys/sells a Call option and a Put option simultaneously for the same underlying asset at a certain point of time provided both options have the same expiry date and same strike price.

Many professional traders trade actively in the first hour or two of trading and take the middle of the day off. This is the best time of the day for trading options for experienced and skillful traders. They may come back for the last hour or two of trading.

A risk management principle known as the “3-5-7” rule in trading advises diversifying one's financial holdings to reduce risk. The 3% rule states that you should never risk more than 3% of your whole trading capital on a single deal.

The Motley Fool has positions in and recommends Alphabet, Amazon, Chewy, Fiverr International, Fortinet, Nvidia, PayPal, Salesforce, and Uber Technologies. The Motley Fool recommends the following options: short March 2024 $67.50 calls on PayPal. The Motley Fool has a disclosure policy.

Adding to winning stocks can amplify gains. The Motley Fool advises holding onto winning stocks, as they often continue to outperform in the long run. "Double down buy alerts" from The Motley Fool signal strong confidence in a stock, urging investors to increase their holdings.

So understand that stocks that trigger the 8-week hold rule often sell off fairly hard during the holding period. This rule helps you sit through that and avoid selling too soon. Once the eight weeks from the original buy point have passed, you can sell to lock in your gains or continue to hold.

In short, the 3-day rule dictates that following a substantial drop in a stock's share price — typically high single digits or more in terms of percent change — investors should wait 3 days to buy.

Yes, you can day trade on Robinhood.

Functionally, it works the same as investing does. You buy a stock through the app, and then you sell it later on in the day.

If you hold a stock for one year or longer, your gain will be taxed at the long-term capital gains tax rate. But if you hold a stock for less than one year before selling it, your gain will typically be taxed at your ordinary income tax rate.