Day Trading in South Korea

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Written By
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Written By
Christian Harris
Christian is a seasoned journalist with decades of experience. He transitioned from tech journalism to finance to follow his interest in investing. He has been trading stocks, futures, forex, and cryptocurrencies for more than 5 years, becoming an eToro Popular Investor. With hands-on expertise across various assets, he offers valuable trading insights.
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Edited By
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James Barra
James is an investment writer with a background in financial services. He has worked as a management consultant, where he delivered large-scale operational transformational programmes at some of Europe's biggest banks. James authors, edits and fact-checks content for a series of investing websites.
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Fact Checked By
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Michael MacKenzie
Michael is a writer and editor with over a decade in journalism and publishing. His niche lies in editing and fact-checking content in the financial services sector, with a focus on online brokers and trading platforms. Michael previously reported on politics and economics in the Middle East and edits books for established publishers.
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South Korea, officially the Republic of Korea (ROK), boasts an economy ranked 10th globally by nominal GDP, with an estimated $1.76 trillion. Renowned for its advanced technology, multinational conglomerates like Samsung and Hyundai contribute to its robust economy while presenting short-term trading opportunities.

This guide will help you understand the essentials of day trading in South Korea.

Quick Introduction

  • Day trading in South Korea is regulated by the Financial Services Commission (FSC), a financial body that provides solid safeguards for South Korean traders.
  • As a significant Asian financial center, the Korea Exchange (KRX) is one of the world’s top 20 largest stock exchanges by market capitalization, valued at around $1.98 trillion.
  • In South Korea, trading profits fall under the ‘miscellaneous income’ category for tax. This means you’re required to declare and pay taxes on earnings to the National Tax Service.

Top 4 Brokers in South Korea

Our exhaustive testing indicates these 4 trading platforms are the best for day traders in South Korea:

Click a broker for details
  1. 1
    AvaTrade
    20% Welcome Bonus up to $10,000

    Ratings
    4.8 / 5
    4.3 / 5
    4.5 / 5
    3.8 / 5
    4.3 / 5
    4.3 / 5
    4.3 / 5
    4.5 / 5
    4.3 / 5
    4 / 5

    $100
    0.01 Lots
    1:30 (Retail) 1:400 (Pro)
    ASIC, CySEC, FSCA, ISA, CBI, FSA, FSRA, BVI, ADGM
    CFDs, Forex, Stocks, Indices, Commodities, ETFs, Bonds, Crypto, Spread Betting, Futures
    WebTrader, AvaTradeGO, AvaOptions, AvaFutures, MT4, MT5, AlgoTrader, TradingCentral, DupliTrade
    Skrill, Wire Transfer, FasaPay, Mastercard, Perfect Money, Swift, MoneyGram, Credit Card, WebMoney, JCB Card, Debit Card, Neteller, Boleto
    USD, EUR, GBP, CAD, AUD
  2. 2
    IC Markets

    Ratings
    4.6 / 5
    4 / 5
    3.5 / 5
    4.6 / 5
    4 / 5
    4.5 / 5
    4 / 5
    3.5 / 5
    3.1 / 5
    4.2 / 5

    $200
    0.01 Lots
    1:30 (ASIC & CySEC), 1:500 (FSA), 1:1000 (Global)
    ASIC, CySEC, FSA, CMA
    CFDs, Forex, Stocks, Indices, Commodities, Bonds, Futures, Crypto
    MT4, MT5, cTrader, TradingView, TradingCentral, DupliTrade
    PayPal, Skrill, Neteller, Visa, UnionPay, Wire Transfer, Rapid Transfer, Mastercard, POLi, BPAY, Credit Card, Klarna, Swift, SafeCharge
    USD, EUR, GBP, CAD, AUD, NZD, JPY, CHF, HKD, SGD
  3. 3
    Deriv.com

    Ratings
    3.5 / 5
    4.5 / 5
    4.5 / 5
    4 / 5
    4 / 5
    4.1 / 5
    2.5 / 5
    3 / 5
    4.2 / 5
    4.5 / 5

    $5
    0.01 Lots
    1:1000
    MFSA, LFSA, VFSC, BFSC
    CFDs, Multipliers, Forex, Stocks, Indices, Commodities
    Deriv Trader, MT5
    Neteller, Visa, Skrill, WebMoney, FasaPay, Perfect Money, Diners Club, Banxa, Paytrust, Wire Transfer, Mastercard, Credit Card, JCB Card, Sticpay, Trustly, Volet, Paysafecard, AstroPay, Maestro, Airtm, Boleto, JetonCash
    USD, EUR, GBP, AUD
  4. 4
    Pepperstone
    CFDs and FX are complex instruments and come with a high risk of losing money rapidly due to leverage. Between 74-89% of retail investor accounts lose money when trading CFDs.

    Ratings
    4.6 / 5
    4 / 5
    3.8 / 5
    4.4 / 5
    4.4 / 5
    4.6 / 5
    4.3 / 5
    4 / 5
    4.4 / 5
    4.1 / 5

    $0
    0.01 Lots
    1:30 (Retail), 1:500 (Pro)
    FCA, ASIC, CySEC, DFSA, CMA, BaFin, SCB
    CFDs, Forex, Currency Indices, Stocks, Indices, Commodities, ETFs, Crypto, Spread Betting
    MT4, MT5, cTrader, TradingView, AutoChartist, DupliTrade
    Visa, Mastercard, Credit Card, Debit Card, PayPal, Wire Transfer, POLi, UnionPay, BPAY, Neteller, Skrill
    USD, EUR, GBP, CAD, AUD, NZD, JPY, CHF, HKD, SGD

All Day Trading Platforms in South Korea

What Is Day Trading In South Korea?

Day trading in South Korea involves capitalizing on short-term price movements by actively buying and selling securities throughout the trading session.

The instruments used in South Korean day trading are diverse, reflecting the country’s economic strengths. This could include stocks listed on the KRX (e.g., Samsung) or forex pairs relevant to the South Korean won (e.g., USD/KRW).

Additionally, a commodity like iron – primarily used by the construction, engineering, automotive, and machinery industries, often as the main ingredient in steel – could also be part of your day trading strategy.

The KOSPI index, composed of prominent South Korean powerhouses, also presents a fertile ground for short-term trading companies including SK Hynix, Kia, and Celltrion.

💡
KOSDAQ, like the US Nasdaq, focuses on technology and growth-oriented companies, while the KOSPI, akin to the S&P 500, is a broader index representing the overall performance of the South Korean stock market.

South Korea allows day trading but with regulations overseen by the Financial Supervisory Service (FSS) and the Financial Services Commission (FSC). These bodies ensure day trading activities comply with financial regulations and uphold market integrity.

The KRX serves as a platform for day trading, facilitating the buying and selling of securities within a single trading day. However, you should adhere to regulatory requirements, understand the inherent risks, and stay informed about the latest market rules.

Korean regulators clamped down on popular short-term trading instrument, contracts for difference (CFDs), in 2023.

CFD traders must now put down at least 40% of the trading amount and meet higher monthly balance thresholds.

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James Barra
Contributor

How To Start Day Trading In South Korea

Day trading in South Korea involves these steps:

  1. Selecting a top broker in South Korea is the first crucial step in your day trading journey. Ensure the broker adheres to rules set by recognized Korean financial authorities.
  2. Next, you’ll need to open an account. The typically involves verifying your identity with official documents like a South Korean National ID Card and proof of your current address. Be prepared to submit some financial information as well. Once approved, you can fund your account using various methods offered by your broker, such as wire transfer, credit card, or digital solutions like South Korea-based Naver Pay.
  3. Select your day trading instruments. Popular options in South Korea may include stocks listed on major exchanges like the KRX (e.g., LG Electronics, Kakao, Meritz Financial Group) and currency pairs like EUR/KRW and JPY/KRW.

A Trade in Action

Here is a scenario demonstrating a short-term trading strategy for the South Korean consumer electronics company Samsung to help you understand how day trading in South Korea works in practice.

Event Background

Earnings reports are a goldmine of information for day traders. They offer a window into a company’s financial health, often leading to significant stock price fluctuations.

This is why I closely followed the Q1 results for Samsung, a global leader in consumer electronics. Earnings reports can reveal whether a company is exceeding, meeting, or falling short of analyst expectations, which can trigger prime trading opportunities.

Data Analysis

Samsung released its Q1 earnings report, highlighting a solid financial performance for the quarter. Revenue surged 12.81% year-over-year while operating profit increased 932.8% compared to the same period last year.

The company posted KRW 71.92 trillion (about $52.3 billion) in consolidated revenue due to strong sales of flagship Galaxy S24 smartphones and higher prices for memory semiconductors.

My pre-market analysis indicated that investor sentiment was cautious, so I expected short-term fluctuations in Samsung’s stock price. Technical analysis of the stock’s price movement over the past few days showed strong support at KRW 76,300 and resistance at KRW 78,000.

Technical analysis on Korean Samsung stock for short-term trade
TradingView – Samsung

Trade Entry

At the market open, Samsung’s stock price gapped up from the previous close of KRW 76,700 to KRW 77,100 (around 0.52%), likely due to the positive earnings report.

Observing a previous support level of around KRW 76,300, I entered a long (buy) position at KRW 78,000, anticipating the price to continue to increase.

Trade Exit

As trading progressed, Samsung’s stock price consolidated around the KRW 78,100 resistance level. Volume was also dropping.

I was confident in the stock’s short-term increase, so I decided to set a target price at the next resistance level (KRW 79,800), hoping the price would reach my target. I put my stop at a previous support level (KRW 77,100).

I was right with my analysis, and the price hit my target, securing a profit from the 2.31% stock price increase.

How Is Day Trading Taxed In South Korea?

South Korea taxes trading profits as ‘miscellaneous income,’ requiring you to declare and pay taxes. The tax treatment might differ slightly depending on whether you’re classified as a professional day trader or an individual investor.

However, regulations create hurdles for Korean forex traders compared to others. Unlike some countries, South Korea prohibits many domestic brokerages. This, along with the tax regulations, can make the legality of online trading seem unclear.

I strongly recommend maintaining accurate records of your day trading activities, including trade dates, purchase prices, sale prices, and any associated fees.

This diligent record-keeping will simplify tax filing to the Korean National Tax Service and help minimize the risk of penalties for tax evasion.

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Christian Harris
Author

Bottom Line

Day trading in South Korea allows you to buy and sell financial instruments like stocks and currency pairs within a single trading day, aiming to profit from short-term price movements.

While legal, it’s regulated by the FSS and FSC to ensure market stability. To start, choose a top Korean day trading broker, open an account, and select your trading instruments.

Remember, day trading involves significant risk and requires understanding market rules and regulations.

Article Sources

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