Buying and Selling Stock Same Day

You might be surprised why your broker won’t allow you to buy and sell stock on the same trading day since the broker earns commissions.

Day trading isn’t bad, unethical, or illegal. It’s just risky and complicated.

From a regulator standpoint, buying and selling on the same day is risky. To defend normal investor from "daytrading", certain accounts might be restricted to reduce brokers from encouraging such risky trades.

Some criteria to mitigate the risks

  • Ensure only professional, certified traders can employ this technique. Day traders should be educated or highly experienced or funded by some well-known financial services institutions.
  • Moreover, day traders are also bound to obey the regulations implemented by the Financial Industry Regulatory Authority (FINRA).

Thereafter, you can probably buy and sell the stock the same day as many times as you like. Remember, only day traders can do this. For doing this, your account must be approved for day trading too. If your account isn’t approved for day trading, your broker will restrict your trading if you are flagged per Security and Exchange Commission (SEC)’s rules.  

We will discuss why brokers won’t allow you to buy and sell stock the same day

Reasons Why Brokers Won’t Allow Day Trading?

There can be lots of reasons, such as:

  • Account restricted from day trading

Brokers won’t allow you day trading because some accounts are restricted to minimize risks. For example, if you are a new investor, your trading account might have some restrictions that won’t allow you to engage in advanced trading strategies. Moreover, your account prevents you from investing in extremely volatile securities. 

You might feel upset by these account restrictions but see the other side of the picture. These restrictions save you from massive financial damage. At the start, traders want to make money without understanding the risks. As mentioned earlier, day trading is very risky. If you are serious in day trading, first of all, educate yourself on how day trading works and risks associated with it. 

  • Lifting trading restrictions

If you feel you have knowledge of day trading and are an experienced trader, you can request your broker to remove restraints from your account. After checking your financial standing and depending on the particular firm, your broker might immediately loosen or remove the restrictions. The other possibility is if you have completed the given number of trades, then your broker can lift the restrictions. If your broker is not lifting restrictions, you can find a more compatible broker with fewer trading restrictions. 

  • Violation of Reg-T

Your account might be restricted due to violation of Regulation T (Reg-T) rules, or you have a margin or cash account. When you have a cash account, it takes two days for trades to settle, and cash will be available for the next trade after two days. It is known as T+2, in which T stands for the day in which trade takes place, and 2 indicated the number of days that it will take to settle the transaction. 

If you are not satisfied with this, you can apply for a margin on your account. A margin account enables you to take a loan against the equity or asset in your account. You can use this margin capital for purchasing the next stock. In simple words, your broker lends you investment to buy securities. Remember, you will have to pay interest two days before your stock sale settles. 

These are the reasons brokers wouldn’t allow you to buy and sell stock the same day. 

Think Twice When Making Decision to Day Trade 

Day trading might be attractive, but it can be extremely risky as well. It requires dedication and skills. If you are expecting to day trade only for half an hour a day and you can out-trade professionals who are doing this day in and day out, then change your mind because it’s not going to happen. The only way to grow in day trading is experience and balance growth. For a new investor, investing in day trading is an invitation for disaster. 

Day Trading Risks

It is mentioned multiple times that day trading is risky because it is impossible to predict market price fluctuations. Day traders have to bet on short term stock prices. Sometimes, gamble works for them, but most of the time, they lose money quickly. According to the U.S. SEC, many day traders suffer massive financial losses, and most of them never make money. So, understand the risk before investing in day trading because it’s not an easy job. 

Tax Implications

For example, you were able to make money, but you will have to pay a higher tax rate than long term investors. Tax implications are not complicated, and everyone can easily understand them. The money you make from selling the stock is subject to capital gains tax. For example, a person holds a stock for more than a year, the maximum capital gains tax is 15%. On the other hand, if a trader holds a stock for less than a year, the tax rate is equal to the taxpayer’s income tax rate. We can say that day trading gains are subjected to high tax rates at 35%. 

Pattern Day Traders

Investors who regularly engage themselves in day trading are known as “pattern day traders.” According to SEC rules, a pattern day trader can execute four or more day trades within five business days. For pattern day traders, it is a must to maintain a minimum account balance of $25,000, and they can trade only in margin accounts. Margin accounts allow day traders to borrow money for investment, increasing the risk of potential losses. 


Can you buy and sell a stock on the same day? Yes, you can if you have a day trading account. Day traders use this strategy, and you can do this as many times as you want. Remember, it is a risky process, and you can lose money in no time. Brokers won’t allow you to buy and sell stock on the same day because of the reasons mentioned above. 


Sky Hoon. Read Full Bio
Website Owner, Twitter-er
He has been trading since 2008. He started this blog to share the journey about option trading. He dabbled in stocks, bitcoin, ethereum (in Celsius Network), ETF (lazy Dollar Cost Averaging) and also built websites for fun. He used this as a platform to share my experiences and mistakes in trading, especially options which I just picked up.